MSME stands for Micro, Small, and Medium Enterprises. The Government of India defines MSMEs based on their investment in plant and machinery or equipment. Here are the details of the definition of MSMEs:
- Micro Enterprises: A micro-enterprise is defined as an enterprise where the investment in plant and machinery or equipment does not exceed Rs. 1 crore ($150,000 approximately) and turnover does not exceed Rs. 5 crores ($750,000 approximately).
- Small Enterprises: A small enterprise is defined as an enterprise where the investment in plant and machinery or equipment is more than Rs. 1 crore but does not exceed Rs. 10 crores ($1.5 million approximately) and turnover does not exceed Rs. 50 crores ($7.5 million approximately).
- Medium Enterprises: A medium enterprise is defined as an enterprise where the investment in plant and machinery or equipment is more than Rs. 10 crores but does not exceed Rs. 50 crores ($7.5 million approximately) and turnover does not exceed Rs. 250 crores ($37.5 million approximately).
The definition of MSMEs based on investment in plant and machinery or equipment was revised by the government in June 2020. Prior to the revision, the investment limits were Rs. 25 lakhs ($37,000 approximately) for micro-enterprises, Rs. 5 crores ($750,000 approximately) for small enterprises, and Rs. 10 crores ($1.5 million approximately) for medium enterprises.
The MSME sector plays a vital role in the Indian economy as it contributes significantly to employment generation and exports. The sector is also considered crucial for the growth of the Indian economy as it provides a platform for entrepreneurship and innovation. The government has taken several initiatives to promote the growth and development of the MSME sector, such as the provision of credit, technology upgradation, and marketing support.