Cabinet meeting decisions - MSME definition: Entities with up to Rs 250 cr turnover, excluding exports, to be medium enterprises

Further widening the definition of micro, small and medium enterprises (MSME), the Union Cabinet on Monday announced that entities with turnover up to Rs 250 crore or investment up to Rs 50 crore will qualify as medium enterprises.

Addressing the media here, post the cabinet meeting, Union Information & Broadcasting Minister Prakash Javadekar said that the decision was taken post suggestions coming in after the government announced the broadening of the scope of MSMEs to support and more businesses.

Also, the turnover criteria for MSME will not include revenue from exports further providing flexibility to the sector to expand their operations and push overseas sales, he said.

On May 13, Finance Minister Nirmala Sitharaman announced to increase of investment limits for MSMEs. Further, she had also said that an additional criteria of turnover has also been introduced for recognition of an MSME.

During that announcement, Sitharaman had raised medium enterprises definition to one with investment and machinery to the tune of Rs 20 crore and turnover of Rs 100 crore. This stands further enhanced now after the cabinet decision.

As per the new changes, businesses with investment of less than Rs 1 crore and turnover of Rs 5 crore would be classified as micro enterprises. Under the existing criteria, a company with investment of less than Rs 25 lakh in the manufacturing sector and less than Rs 10 lakh in the services sector were considered micro enterprises.

The Cabinet had changed this distinction as well and a unified criteria will be applied for micro enterprises.

The investment limit of small enterprises has been increased to Rs 10 crore, and the companies would have to have turnover of less than Rs 50 crore.

Further, the investment limit for medium enterprises has been increased to Rs 20 crore and the turnover limit has been kept at Rs 100 crore, which has now been extended to companies with investment of Rs 50 crore and turnover of up to Rs 250 crore.

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Under the Aatmanirbhar Bharat package, the government has also done away with the distinction of services and manufacturing MSME.

Briefing media persons about the cabinet decision, MSME Minister Nitin Gadkari said that the changes would benefit 6 crore MSMEs that together employ 11 crore people.