MSME stands for Micro, Small and Medium Enterprises. In a developing country like India, MSME industries are the backbone of the economy. When these industries grow, the economy of the country grows as a whole and flourishes. These industries are also known as small-scale industries or SSI’s.
Even if the Company is in the manufacturing line or the service line, registrations for both these areas can be obtained through the MSME act. This registration is not yet made mandatory by the Government but it is beneficial to get one’s business registered under this because it provides a lot of benefits in terms of taxation, setting up the business, credit facilities, loans etc.
The MSME became operational on October 02, 2006. It was established to promote, facilitate and develop the competitiveness of the micro, small and medium enterprises.
In a major relief to the Indian retail and wholesale traders, Union Minister for Micro, Small and Medium Enterprises (MSMEs), Nitin Gadkari, on 02 July, 2021 announced their inclusion under the MSME sector. Ministry of Micro, Small and Medium Enterprises has decided to include Retail and Wholesale trade as MSMEs for the limited purpose of Priority Sector Lending. Previously MSME enterprises can be only Manufacturing or Service Unit.
What are Micro, Small and Medium Enterprise?
Under the Aatmanirbhar Bharat Abhiyan (ABA), the government revised the MSME classification by inserting composite criteria of both investment and annual turnover. Also, the distinction between the manufacturing and the services sectors under the MSME definition was removed.
The following is the current revised MSME classification, where the investment and annual turnover are to be considered for deciding an MSME.
Criteria Micro Small Medium*
Investment < Rs.1 crore < Rs.10 crore < Rs.50 crore
Annual Turnover < Rs.5 crore < Rs.50 crore < Rs.250 crore