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BIG BOOST FOR MSMEs
BIG BOOST FOR MSMEs
BIG BOOST FOR MICRO, SMALL AND MEDIUM ENTERPRISES
Recent Modification in the Definition of MSME in India
A Historical Perspective
Often hailed as the driving force of the Indian economy, Micro, Small, and Medium Enterprises (MSMEs) power India’s growth story by creating massive employment opportunities, boosting industrial output, and contributing remarkably to exports. Interestingly, how an enterprise is classified as an MSME is not just a technical definition — it unlocks access to a world of government benefits, incentives, and special schemes aimed at nurturing and supporting these vital businesses. In a landmark move during the latest Budget Session of the Parliament in 2025, the definition of MSME has been modified once again to meet the evolving needs of businesses and strengthen the MSME ecosystem.
Historical Evolution of MSME Definition
MSMED Act, 2006 – The First Statutory Definition
The Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) originally classified MSMEs based on investment in plant and machinery or equipment:
| Type of Enterprise | Manufacturing Sector | Service Sector |
| Micro | Up to ₹25 lakh | Up to ₹10 lakh |
| Small | ₹25 lakh to ₹5 crore | ₹10 lakh to ₹2 crore |
| Medium | ₹5 crore to ₹10 crore | ₹2 crore to ₹5 crore |
2020 Revision – Introduction of Composite Criteria
In 2020, as part of the AatmNirbhar Bharat Package, the Government revised the definition of MSME to include both investment and turnover criteria:
| Type of Enterprise | Investment Limit | Annual Turnover Limit |
| Micro | Up to ₹1 crore | Up to ₹5 crore |
| Small | Up to ₹10 crore | Up to ₹50 crore |
| Medium | Up to ₹50 crore | Up to ₹250 crore |
This move brought parity between manufacturing and service sectors.
Latest Revision in 2025 – A Game Changer
In the Budget Session of Parliament 2025, the Government has introduced a more liberal and growth-oriented definition for MSMEs. The new definition aims to promote scalability and encourage MSMEs to graduate to larger enterprises without the fear of losing benefits.
New Definition of MSME (Effective 2025)
| Type of Enterprise | Investment Limit | Annual Turnover Limit |
| Micro | Up to ₹2 crore | Up to ₹10 crore |
| Small | Up to ₹20 crore | Up to ₹100 crore |
| Medium | Up to ₹100 crore | Up to ₹500 crore |
Key Highlights of the 2025 Amendment:
- Significant enhancement in Investment and Turnover limits.
- Encourages scaling-up of business operations.
- Boosts confidence of startups and growth-stage enterprises.
- Extended benefits for longer periods.
Impact of the New Definition on MSMEs
- Larger number of enterprises will now fall under the MSME category.
- Increased eligibility for government schemes, subsidies, and protections.
- Strengthening of MSME credit flow.
- Enhanced competitiveness in domestic and international markets.
Conclusion
The latest revision in the definition of MSMEs marks a bold step towards building a more resilient and growth-driven MSME sector in India. The Government’s vision is clear — to make MSMEs future-ready and globally competitive. Enterprises must update their registration under Udyam Portal to avail benefits of this new definition.
Stay tuned for more updates on MSME Laws, Notifications, and Compliance Guidance!
Visit www.msmeteam.com