Owning a small business enterprise is a boon from various perspectives. First and foremost, these business entities are eligible for various tax sops and there are various government-run schemes that help them find new business. To handle the affairs of small and medium-sized enterprises, there is a  dedicated ministry. Schemes like Udyog Aadgar memorandum, zero defect for zero effect schemes for exporters in SME and MSME segment, credit-linked capital subsidy schemes, etc. have been designed only for the small business'.

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Therefore, when an SME's business flourishes and started going beyond the given upper threshold of their size, they split their company and float another company. According to the SME and MSME experts, they do this to avoid excise duty, which is exempted from the units falling under the small business category. The small unit owners do this to continue the subsidy and tax sops they are getting as a small business unit.

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