{"id":1716,"date":"2024-10-25T10:14:58","date_gmt":"2024-10-25T04:44:58","guid":{"rendered":"https:\/\/razorpay.com\/learn\/?p=1716"},"modified":"2026-01-05T13:42:24","modified_gmt":"2026-01-05T08:12:24","slug":"new-msme-definition-turnover-2020","status":"publish","type":"post","link":"https:\/\/razorpay.com\/learn\/new-msme-definition-turnover-2020\/","title":{"rendered":"MSME Definition: MSME Meaning &#038; Latest Classification with Turnover Limit in 2026"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69e2fcad03ec3\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69e2fcad03ec3\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/razorpay.com\/learn\/new-msme-definition-turnover-2020\/#What-is-the-Full-Form-of-MSME\" >What is the Full Form of MSME?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/razorpay.com\/learn\/new-msme-definition-turnover-2020\/#What-is-MSME\" >What is MSME?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/razorpay.com\/learn\/new-msme-definition-turnover-2020\/#MSME-Classifications-Micro-Small-and-Medium-Enterprises-MSME\" >MSME Classifications: Micro, Small, and Medium Enterprises (MSME)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/razorpay.com\/learn\/new-msme-definition-turnover-2020\/#What-is-an-MSME-Certificate\" >What is an MSME Certificate?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/razorpay.com\/learn\/new-msme-definition-turnover-2020\/#Ministry-of-Micro-Small-and-Medium-Enterprises\" >Ministry of Micro, Small and Medium Enterprises<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/razorpay.com\/learn\/new-msme-definition-turnover-2020\/#Benefits-of-Being-Classified-as-MSME\" >Benefits of Being Classified as MSME<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/razorpay.com\/learn\/new-msme-definition-turnover-2020\/#Features-of-MSME\" >Features of MSME<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/razorpay.com\/learn\/new-msme-definition-turnover-2020\/#Role-of-MSMEs-in-the-Indian-Economy\" >Role of MSMEs in the Indian Economy<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/razorpay.com\/learn\/new-msme-definition-turnover-2020\/#Why-the-MSME-Definition-was-changed\" >Why the MSME Definition was changed?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/razorpay.com\/learn\/new-msme-definition-turnover-2020\/#Key-announcements-of-Atma-nirbhar-Bharat-Abhiyaan\" >Key announcements of Atma-nirbhar Bharat Abhiyaan<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/razorpay.com\/learn\/new-msme-definition-turnover-2020\/#Old-MSME-Definition-Based-on-Investment-MSMED-Act-2006\" >Old MSME Definition Based on Investment, MSMED Act, 2006<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/razorpay.com\/learn\/new-msme-definition-turnover-2020\/#Frequently-Asked-Questions-FAQs\" >Frequently Asked Questions (FAQs)<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"What-is-the-Full-Form-of-MSME\"><\/span><b>What is the Full Form of MSME?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\r\n<p><span style=\"font-weight: 400;\">The full form of MSME is <\/span><b>Micro, Small, and Medium Enterprises<\/b><span style=\"font-weight: 400;\">. Defined under the Micro, Small, and Medium Enterprises Development (MSMED) Act of 2006, MSMEs include businesses classified as micro, small, or medium enterprises.<\/span><\/p>\r\n<h2><span class=\"ez-toc-section\" id=\"What-is-MSME\"><\/span><b>What is MSME?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\r\n<p><span style=\"font-weight: 400;\">Micro, Small, and Medium Enterprises (MSMEs) are businesses defined by their investment in equipment and annual turnover limits, as outlined by the Government of India. MSMEs play a vital role in economic development, generating employment and fostering innovation across sectors like manufacturing, services, and trade. The MSME Development <a href=\"https:\/\/samadhaan.msme.gov.in\/WriteReadData\/DocumentFile\/MSMED2006act.pdf\" target=\"_blank\" rel=\"noopener\">(MSMED) Act of 2006<\/a> categorizes these enterprises into micro, small, and medium businesses based on specific investment and turnover limit criteria.<\/span><\/p>\r\n<p><em><b>Related Read: <\/b><a href=\"https:\/\/razorpay.com\/learn\/new-msme-definition-turnover-2020\/\"><b>MSME Explained: Full Form, Meaning &amp; Key Features<\/b><\/a><\/em><\/p>\r\n<h2 dir=\"ltr\" data-pm-slice=\"1 3 []\"><span class=\"ez-toc-section\" id=\"MSME-Classifications-Micro-Small-and-Medium-Enterprises-MSME\"><\/span><b>MSME Classifications: Micro, Small, and Medium Enterprises (MSME)<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\r\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">In 2020, the Government of India updated MSME classifications and <span data-text-color-mark=\"rgb(14, 16, 26)\">MSME Criteria<\/span> based on investment and MSME turnover limits. This revised structure supports micro, small, and medium enterprises, allowing more businesses to access tailored benefits and incentives.<\/span><\/p>\r\n<h3><b>What is a Micro Enterprise?<\/b><\/h3>\r\n<p>A micro enterprise is defined as a business with limited investments in plant and machinery or equipment, operating in manufacturing, services, or trading sectors.<\/p>\r\n<h4>Micro Enterprise Investment Limit<\/h4>\r\n<p>The MSME Investment limit for micro enterprises in plant and machinery or equipment should be below \u20b91 crore.<\/p>\r\n<h4>Micro Enterprise Turnover Limit<\/h4>\r\n<p>MSME Criteria: Micro Enterprise Turnover limit should not exceed \u20b95 crore.<\/p>\r\n<h3><b>What is a Small Enterprise?<\/b><\/h3>\r\n<p>A small enterprise is characterized by a higher investment capacity and turnover threshold than micro enterprises, allowing it to engage in manufacturing, services, or trading.<\/p>\r\n<h4>Small Enterprise Investment Limit<\/h4>\r\n<p>Investment in plant and machinery or equipment should be below \u20b910 crore.<\/p>\r\n<h4>Small Enterprises Turnover Limit<\/h4>\r\n<p>Small Enterprises Turnover Limit should not exceed \u20b950 crore.<\/p>\r\n<h3><b>What is a Medium Enterprise?<\/b><\/h3>\r\n<p>A medium enterprise has the highest investment and turnover limits within the MSME classification, supporting operations in manufacturing, services, or trading.<\/p>\r\n<h4>Medium Enterprise Investment Limit<\/h4>\r\n<p>Investment in plant and machinery or equipment should be below \u20b950 crore.<\/p>\r\n<h4>Medium Enterprises Turnover Limit<\/h4>\r\n<p>Medium Enterprises Turnover Limit is capped at \u20b9250 crore.<\/p>\r\n<h3 dir=\"ltr\"><a href=\"https:\/\/razorpay.com\/rize\/company-registration?utm_source=learn_articles&amp;utm_medium=CTA_Button&amp;utm_campaign=MSME_definition\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" class=\"alignnone wp-image-13556 size-full\" src=\"https:\/\/d6xcmfyh68wv8.cloudfront.net\/learn-content\/uploads\/2024\/07\/Screenshot-2024-09-24-at-5.20.07\u202fPM-scaled.webp\" alt=\"\" width=\"2560\" height=\"231\" srcset=\"https:\/\/d6xcmfyh68wv8.cloudfront.net\/learn-content\/uploads\/2024\/07\/Screenshot-2024-09-24-at-5.20.07\u202fPM-scaled.webp 2560w, https:\/\/d6xcmfyh68wv8.cloudfront.net\/learn-content\/uploads\/2024\/07\/Screenshot-2024-09-24-at-5.20.07\u202fPM-300x27.webp 300w, https:\/\/d6xcmfyh68wv8.cloudfront.net\/learn-content\/uploads\/2024\/07\/Screenshot-2024-09-24-at-5.20.07\u202fPM-1024x93.webp 1024w, https:\/\/d6xcmfyh68wv8.cloudfront.net\/learn-content\/uploads\/2024\/07\/Screenshot-2024-09-24-at-5.20.07\u202fPM-768x69.webp 768w, https:\/\/d6xcmfyh68wv8.cloudfront.net\/learn-content\/uploads\/2024\/07\/Screenshot-2024-09-24-at-5.20.07\u202fPM-1536x139.webp 1536w, https:\/\/d6xcmfyh68wv8.cloudfront.net\/learn-content\/uploads\/2024\/07\/Screenshot-2024-09-24-at-5.20.07\u202fPM-2048x185.webp 2048w\" sizes=\"(max-width: 2560px) 100vw, 2560px\" \/><\/a><b>MSME Classification Based on Turnover Limit in 2026<\/b><\/h3>\r\n<p><span style=\"font-weight: 400;\">The new <\/span><b>MSME classification<\/b><span style=\"font-weight: 400;\"> for <\/span><a href=\"https:\/\/razorpay.com\/learn\/msme-india-registration\/\"><span style=\"font-weight: 400;\">MSME registration<\/span><\/a><span style=\"font-weight: 400;\"> is based on a composite criterion of <\/span><b>investment and MSME turnover limit<\/b><span style=\"font-weight: 400;\">, replacing the previous investment-only criterion.<\/span><\/p>\r\n<p><span style=\"font-weight: 400;\">The classification of MSMEs by <\/span>turnover and investment limits<span style=\"font-weight: 400;\"> is as follows:<\/span><\/p>\r\n<table>\r\n<tbody>\r\n<tr>\r\n<td colspan=\"3\">\r\n<h3 style=\"text-align: center;\"><strong>Updated MSME Definition and Criteria in 2026<\/strong><\/h3>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\r\n<h4 style=\"text-align: center;\"><strong>Type of Enterprise<\/strong><\/h4>\r\n<\/td>\r\n<td style=\"text-align: center;\">\r\n<h4><strong>Investment<\/strong><\/h4>\r\n<\/td>\r\n<td>\r\n<h4 style=\"text-align: center;\"><strong>MSME Turnover Limit<\/strong><\/h4>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\r\n<p style=\"text-align: center;\"><strong>Micro Enterprise<\/strong><\/p>\r\n<\/td>\r\n<td style=\"text-align: center;\">\r\n<p>Rs 1 crore<\/p>\r\n<\/td>\r\n<td style=\"text-align: center;\">\r\n<p>Rs 5 crore<\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\r\n<p style=\"text-align: center;\"><strong>Small Enterprise<\/strong><\/p>\r\n<\/td>\r\n<td style=\"text-align: center;\">\r\n<p>Rs 10 crore<\/p>\r\n<\/td>\r\n<td>\r\n<p style=\"text-align: center;\">Rs 50 crore<\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td style=\"text-align: center;\">\r\n<p><strong>Medium Enterprise<\/strong><\/p>\r\n<\/td>\r\n<td style=\"text-align: center;\">\r\n<p>Rs 50 crore<\/p>\r\n<\/td>\r\n<td>\r\n<p style=\"text-align: center;\">Rs 250 crore<\/p>\r\n<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<p>&nbsp;<\/p>\r\n<p><span style=\"font-weight: 400;\">If the net turnover exceeds 250 crores, the enterprise falls outside the MSME category and is classified as a large enterprise.<\/span><\/p>\r\n<p>On 13th May 2020, Finance Minister Nirmala Sitharaman added the additional principle of turnover along with the investment.<\/p>\r\n<p>In October 2019, Union Minister Nitin Gadkari had said that the revised definition of micro, small, and medium enterprises may grant a unified description for all things related to taxation, investment, and more.<\/p>\r\n<p>The changed definition was to be implemented via an amendment that would further refine the business scenario for Indian enterprises. The Union Cabinet had approved the amendment to change the criteria to classify MSMEs from \u201c<b>investment in plant and machinery<\/b>\u201d to \u201c<b>annual turnover<\/b>.\u201d<\/p>\r\n<p dir=\"ltr\"><span data-text-color-mark=\"rgb(14, 16, 26)\">The new classification and MSME Criteria aims to encourage MSMEs to grow and expand their business without losing the benefits and incentives provided by the government.<\/span><\/p>\r\n<p dir=\"ltr\"><em><strong>Related Read: <a href=\"https:\/\/razorpay.com\/learn\/union-budget-2024-highlights-for-msme\/\">What&#8217;s there for MSMEs in the Budget 2024?<\/a><\/strong><\/em>\u00a0<\/p>\r\n<h2><span class=\"ez-toc-section\" id=\"What-is-an-MSME-Certificate\"><\/span><b>What is an MSME Certificate?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\r\n<p><span style=\"font-weight: 400;\">An <a href=\"https:\/\/razorpay.com\/learn\/msme-registration-certificate\/\">MSME Certificate<\/a> is an official document issued by the Government of India to certify that a business qualifies as a Micro, Small, or Medium Enterprise (MSME). This certification, often acquired through the <a href=\"https:\/\/razorpay.com\/learn\/what-is-udyam-registration\/\">Udyam Registration portal<\/a>, grants businesses recognition under the MSME Development (MSMED) Act, 2006. The certificate helps MSMEs access various government benefits, such as subsidies, lower interest rates on loans, tax exemptions, and access to government tenders specifically reserved for small businesses.<\/span><\/p>\r\n<h2 dir=\"ltr\"><span class=\"ez-toc-section\" id=\"Ministry-of-Micro-Small-and-Medium-Enterprises\"><\/span><span data-text-color-mark=\"rgb(14, 16, 26)\">Ministry of Micro, Small and Medium Enterprises<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\r\n<p dir=\"ltr\"><span data-text-color-mark=\"rgb(14, 16, 26)\">The ministry of MSME is the nodal ministry of the Government of India for promoting and developing the MSME sector, including Khadi, Village, and Coir Industries. The current leadership of the MSME ministry consists of Shri Narayan Tatu Rane and Shri Bhanu Pratap Singh Verma as the Minister of State.<\/span><\/p>\r\n<p dir=\"ltr\"><span data-text-color-mark=\"rgb(14, 16, 26)\">Established under the MSME Development Act of 2006, the NBMSME acts as the government&#8217;s main advisory body for all matters concerning the MSME sector. The board comprises members from the central and state governments, industry associations, financial institutions, academic institutions, and other stakeholders.<\/span><\/p>\r\n<p dir=\"ltr\"><span data-text-color-mark=\"rgb(14, 16, 26)\">The responsibilities of the NBMSME include the following:<\/span><\/p>\r\n<ul dir=\"ltr\">\r\n<li>\r\n<p dir=\"ltr\"><span data-text-color-mark=\"rgb(14, 16, 26)\">To explore the factors affecting the promotion and development of MSMEs and to suggest remedial measures.<\/span><\/p>\r\n<\/li>\r\n<li>\r\n<p dir=\"ltr\"><span data-text-color-mark=\"rgb(14, 16, 26)\">Review the policies and programs of the central and state governments concerning MSMEs and make recommendations for their improvement.<\/span><\/p>\r\n<\/li>\r\n<li>\r\n<p dir=\"ltr\"><span data-text-color-mark=\"rgb(14, 16, 26)\">To advise the government on using funds and incentives for the MSME sector and to monitor their implementation.<\/span><\/p>\r\n<\/li>\r\n<li>\r\n<p dir=\"ltr\"><span data-text-color-mark=\"rgb(14, 16, 26)\">To coordinate with other ministries, departments, and agencies on matters concerning MSMEs and to ensure convergence of <\/span><a href=\"https:\/\/razorpay.com\/learn\/business-banking\/top-10-msme-loan-schemes-in-india-2023\/\" rel=\"noopener noreferrer nofollow\" data-factors-click-bind=\"false\"><span data-text-color-mark=\"#2E16E6\">MSME loan schemes<\/span><\/a><span data-text-color-mark=\"rgb(14, 16, 26)\"> and initiatives.<\/span><\/p>\r\n<\/li>\r\n<li>\r\n<p dir=\"ltr\"><span data-text-color-mark=\"rgb(14, 16, 26)\">To facilitate the participation of MSMEs in international trade and to suggest measures for enhancing their competitiveness and market access.<\/span><\/p>\r\n<\/li>\r\n<\/ul>\r\n<h2 dir=\"ltr\"><span class=\"ez-toc-section\" id=\"Benefits-of-Being-Classified-as-MSME\"><\/span><b>Benefits of Being Classified as MSME<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\r\n<p><span style=\"font-weight: 400;\">The Ministry of MSME provides various benefits to the MSME sector through its attached offices, autonomous bodies, and public sector undertakings. Some of these benefits are:<\/span><\/p>\r\n<h3 dir=\"ltr\"><strong><span data-text-color-mark=\"rgb(14, 16, 26)\">Testing facilities<\/span><\/strong><\/h3>\r\n<p dir=\"ltr\"><span data-text-color-mark=\"rgb(14, 16, 26)\">The ministry operates a network of testing centres and laboratories nationwide, where MSMEs can avail of quality testing, calibration, certification, and consultancy services for their products and processes.<\/span><\/p>\r\n<h3 dir=\"ltr\"><strong><span data-text-color-mark=\"rgb(14, 16, 26)\">Entrepreneurship development<\/span><\/strong><\/h3>\r\n<p dir=\"ltr\"><span data-text-color-mark=\"rgb(14, 16, 26)\">The ministry conducts training programmes, workshops, seminars, and awareness campaigns to promote <a href=\"https:\/\/razorpay.com\/learn\/what-is-entrepreneurship\/\">entrepreneurship<\/a> among potential and existing entrepreneurs, especially women, youth, and marginalised groups.<\/span><\/p>\r\n<h3 dir=\"ltr\"><strong><span data-text-color-mark=\"rgb(14, 16, 26)\">Project profiling<\/span><\/strong><\/h3>\r\n<p dir=\"ltr\"><span data-text-color-mark=\"rgb(14, 16, 26)\">The ministry prepares and disseminates project profiles and feasibility reports on various sectors and sub-sectors of MSMEs to assist entrepreneurs in setting up and running their enterprises.<\/span><\/p>\r\n<h3 dir=\"ltr\"><strong><span data-text-color-mark=\"rgb(14, 16, 26)\">Consultancy<\/span><\/strong><\/h3>\r\n<p dir=\"ltr\"><span data-text-color-mark=\"rgb(14, 16, 26)\">The ministry provides consultancy services to MSMEs on various aspects, such as technology upgradation, marketing, finance, management, and legal issues, through its network of field offices and partner organizations.<\/span><\/p>\r\n<h3 dir=\"ltr\"><strong><span data-text-color-mark=\"rgb(14, 16, 26)\">Export assistance<\/span><\/strong><\/h3>\r\n<p dir=\"ltr\"><span data-text-color-mark=\"rgb(14, 16, 26)\">The ministry facilitates the export of MSME products and services by providing information, guidance, incentives, and support to exporters and by participating in trade fairs and exhibitions, both domestic and international.<\/span><\/p>\r\n<h3 dir=\"ltr\"><strong><span data-text-color-mark=\"rgb(14, 16, 26)\">Environmental audits<\/span><\/strong><\/h3>\r\n<p dir=\"ltr\"><span data-text-color-mark=\"rgb(14, 16, 26)\">The ministry conducts environmental audits and assessments of MSME units, to help them comply with the environmental norms and regulations, and to adopt eco-friendly practices and technologies.<\/span><\/p>\r\n<h2><span class=\"ez-toc-section\" id=\"Features-of-MSME\"><\/span><strong>Features of MSME<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\r\n<p><span style=\"font-weight: 400;\">Here are some of the essential features of MSMEs<\/span><\/p>\r\n<ol>\r\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">MSMEs are known to provide reasonable assistance for improved access to the domestic as well as export markets for businesses<\/span><\/li>\r\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">MSMEs support product development, design innovation, intervention, and packaging elements of a business<\/span><\/li>\r\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">MSMEs support the upgrading of technology, infrastructure, and the modernization of this sector as a whole<\/span><\/li>\r\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">MSMEs provide employment opportunities and loans\u00a0<\/span><\/li>\r\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">MSMEs provide credit limits or funding support to various banks in the country<\/span><\/li>\r\n<\/ol>\r\n<h2><span class=\"ez-toc-section\" id=\"Role-of-MSMEs-in-the-Indian-Economy\"><\/span><strong><a href=\"https:\/\/razorpay.com\/rize\/company-registration?utm_source=learn_articles&amp;utm_medium=CTA_Button&amp;utm_campaign=MSME_definition\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" class=\"aligncenter wp-image-13556 size-full\" src=\"https:\/\/d6xcmfyh68wv8.cloudfront.net\/learn-content\/uploads\/2024\/07\/Screenshot-2024-09-24-at-5.20.07\u202fPM-scaled.webp\" alt=\"\" width=\"2560\" height=\"231\" srcset=\"https:\/\/d6xcmfyh68wv8.cloudfront.net\/learn-content\/uploads\/2024\/07\/Screenshot-2024-09-24-at-5.20.07\u202fPM-scaled.webp 2560w, https:\/\/d6xcmfyh68wv8.cloudfront.net\/learn-content\/uploads\/2024\/07\/Screenshot-2024-09-24-at-5.20.07\u202fPM-300x27.webp 300w, https:\/\/d6xcmfyh68wv8.cloudfront.net\/learn-content\/uploads\/2024\/07\/Screenshot-2024-09-24-at-5.20.07\u202fPM-1024x93.webp 1024w, https:\/\/d6xcmfyh68wv8.cloudfront.net\/learn-content\/uploads\/2024\/07\/Screenshot-2024-09-24-at-5.20.07\u202fPM-768x69.webp 768w, https:\/\/d6xcmfyh68wv8.cloudfront.net\/learn-content\/uploads\/2024\/07\/Screenshot-2024-09-24-at-5.20.07\u202fPM-1536x139.webp 1536w, https:\/\/d6xcmfyh68wv8.cloudfront.net\/learn-content\/uploads\/2024\/07\/Screenshot-2024-09-24-at-5.20.07\u202fPM-2048x185.webp 2048w\" sizes=\"(max-width: 2560px) 100vw, 2560px\" \/><\/a>Role of MSMEs in the Indian Economy<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\r\n<p><span style=\"font-weight: 400;\">The MSME sector has proven to be a highly dynamic factor in the forecasting of the Indian economy. Since MSMEs produce and manufacture a variety of products for both domestic as well as international markets, they have helped promote the growth and development of various product segments and industries.\u00a0<\/span><\/p>\r\n<p><span style=\"font-weight: 400;\">MSMEs have played an essential role in providing employment opportunities in underprivileged areas. They have helped in the industrialization of such areas with a low capital cost compared to the larger industries in cities. MSMEs have also contributed and played an essential role in the country\u2019s development in different areas like the requirement of low investment, flexibility in operations, low rate of imports, and a high contribution to domestic production.<\/span><\/p>\r\n<div style=\"text-align: center;\"><em><a style=\"border-radius: 3px; background: #528FF0; padding: 15px; font-weight: 600; cursor: pointer; text-decoration: none; color: white;\" href=\"https:\/\/razorpay.com\/\">Easiest Way for MSMEs to Accept Payments Online<\/a><\/em><\/div>\r\n<h2><span class=\"ez-toc-section\" id=\"Why-the-MSME-Definition-was-changed\"><\/span>Why the MSME Definition was changed?<span class=\"ez-toc-section-end\"><\/span><\/h2>\r\n<p>As Finance Minister Nirmala Sitharaman made the announcement about the change, she also addressed the reasons behind it. She said the new definition will bring about many benefits that will aid MSMEs to grow in size.<\/p>\r\n<p>This was made under <b>Atma-nirbhar Bharat Abhiyaan Economic Package <span style=\"font-weight: 400;\">to assuage India\u2019s economic predicament amidst the pandemic. <\/span><\/b><\/p>\r\n<p><b><span style=\"font-weight: 400;\">Combined with all previous economic stimulus efforts, the total amount of the relief package comes to a whopping Rs. 20 lakh crore.<\/span><\/b><\/p>\r\n<p style=\"text-align: center;\"><em>Read more: <a href=\"https:\/\/razorpay.com\/learn\/highlights-atma-nirbhar-bharat-abhiyaan-economic-package\/\">Highlights from Atma-nirbhar Bharat Abhiyaan Economic Package<\/a><\/em><\/p>\r\n<h2><span class=\"ez-toc-section\" id=\"Key-announcements-of-Atma-nirbhar-Bharat-Abhiyaan\"><\/span>Key announcements of <b>Atma-nirbhar Bharat Abhiyaan<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\r\n<ul>\r\n<li>Rs 3 lakh crore collateral free automatic loans for MSMEs<\/li>\r\n<li>Rs 50,000 crore equity infusion through MSME Fund of Funds<\/li>\r\n<li>Rs 20 crore subordinate debt for MSMEs<\/li>\r\n<li>Extension of registration and completion date of real estate projects under RERA<\/li>\r\n<li>Immediate pending refunds issuance to all non charitable trusts<\/li>\r\n<li>Extension of the due date for ITR for FY&#8217;19-20 to November 30, 2020<\/li>\r\n<\/ul>\r\n<h2><span class=\"ez-toc-section\" id=\"Old-MSME-Definition-Based-on-Investment-MSMED-Act-2006\"><\/span>Old MSME Definition Based on Investment, MSMED Act, 2006<span class=\"ez-toc-section-end\"><\/span><\/h2>\r\n<table>\r\n<tbody>\r\n<tr>\r\n<td colspan=\"2\">\r\n<h3><strong>Manufacturing Sector<\/strong><\/h3>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\r\n<p><strong>Enterprises<\/strong><\/p>\r\n<\/td>\r\n<td>\r\n<p><strong>Investment in plant and machinery<\/strong><\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\r\n<p><span style=\"font-weight: 400;\">Micro enterprises<\/span><\/p>\r\n<\/td>\r\n<td>\r\n<p><span style=\"font-weight: 400;\">&lt; or = Rs 25 lakh<\/span><\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\r\n<p><span style=\"font-weight: 400;\">Small enterprises<\/span><\/p>\r\n<\/td>\r\n<td>\r\n<p><span style=\"font-weight: 400;\">&gt; Rs 25 lakh &lt; Rs 5 crore<\/span><\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\r\n<p><span style=\"font-weight: 400;\">Medium enterprises<\/span><\/p>\r\n<\/td>\r\n<td>\r\n<p><span style=\"font-weight: 400;\">&gt; Rs 5 crore &lt; Rs 10 crore<\/span><\/p>\r\n<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<p>&nbsp;<\/p>\r\n<table>\r\n<tbody>\r\n<tr>\r\n<td colspan=\"2\">\r\n<h3><strong>Services Sector<\/strong><\/h3>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\r\n<p><strong>Enterprises<\/strong><\/p>\r\n<\/td>\r\n<td>\r\n<p><strong>Investment in equipment<\/strong><\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\r\n<p><span style=\"font-weight: 400;\">Micro enterprises<\/span><\/p>\r\n<\/td>\r\n<td>\r\n<p><span style=\"font-weight: 400;\">&lt; or = Rs 10 lakh<\/span><\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\r\n<p><span style=\"font-weight: 400;\">Small enterprises<\/span><\/p>\r\n<\/td>\r\n<td>\r\n<p><span style=\"font-weight: 400;\">&gt; Rs 10 lakh &lt; Rs 2 crore<\/span><\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\r\n<p><span style=\"font-weight: 400;\">Medium enterprises<\/span><\/p>\r\n<\/td>\r\n<td>\r\n<p><span style=\"font-weight: 400;\">&gt; Rs 2 crore &lt; Rs 5 crore<\/span><\/p>\r\n<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<p>&nbsp;<\/p>\r\n<p><span style=\"font-weight: 400;\">Headquartered in New Delhi, the Ministry of MSME is a branch of the Indian Government, which is the apex body for the formulation and administration of rules, and laws, pertaining to micro, small, and medium-sized enterprises in the country.<\/span><\/p>\r\n<p><span style=\"font-weight: 400;\">Having created 11 crore job opportunities in India while contributing to the GDP by 29%, we can say that MSMEs are the heart of the Indian economy. And the change in the definition will enable Indian enterprises to carry out their businesses better.<\/span><\/p>\r\n<p><strong><em>Razorpay<\/em> enables payments to many micro, small, and medium-sized companies with its product suite.\u00a0 Sign up now and supercharge your business with Razorpay.<\/strong><\/p>\r\n\r\n<div style=\"text-align: center;\"><em><a style=\"border-radius: 3px; background: #528ff0; padding: 15px; font-weight: 600; cursor: pointer; text-decoration: none; color: white;\" href=\"https:\/\/razorpay.com\/\" target=\"_blank\" rel=\"noopener noreferrer\">Get started with Razorpay<\/a><\/em><\/div>\r\n<h2 dir=\"ltr\"><span class=\"ez-toc-section\" id=\"Frequently-Asked-Questions-FAQs\"><\/span>Frequently Asked Questions (FAQs)<span class=\"ez-toc-section-end\"><\/span><\/h2>\r\n<h3 dir=\"ltr\"><strong><span data-text-color-mark=\"rgb(14, 16, 26)\">1. Who are MSME companies?<\/span><\/strong><\/h3>\r\n<p dir=\"ltr\"><span data-text-color-mark=\"rgb(14, 16, 26)\">The Ministry of Micro, Small, and Medium Enterprises, a branch of the Government of India, is primarily used for laying the foundation and administration of rules, regulations, and laws relating to micro, small and medium enterprises in India.<\/span><\/p>\r\n<h3 dir=\"ltr\"><strong><span data-text-color-mark=\"rgb(14, 16, 26)\">2. What is meant by MSME?<\/span><\/strong><\/h3>\r\n<p dir=\"ltr\"><span data-text-color-mark=\"rgb(14, 16, 26)\">MSME stands for Micro, Small, and Medium Enterprises. It was introduced by the Government of India in agreement with the MSMED (Micro, Small, and Medium Enterprises Development) Act of 2006. As per this act, MSMEs are the enterprises involved in the processing, production, and preservation of goods and commodities.<\/span><\/p>\r\n<h3 dir=\"ltr\"><strong><span data-text-color-mark=\"rgb(14, 16, 26)\">3. What is the MSME Investment Limit?<\/span><\/strong><\/h3>\r\n<ul>\r\n<li dir=\"ltr\"><em><span data-text-color-mark=\"rgb(14, 16, 26)\"><strong>Micro Enterprises Investment Limit<\/strong>: Less than 1 crore INR <\/span><\/em><span data-text-color-mark=\"rgb(14, 16, 26)\"> Investment limit for Small Enterprises: 1-10 crore INR<\/span><\/li>\r\n<li dir=\"ltr\"><em><span data-text-color-mark=\"rgb(14, 16, 26)\"><strong>Medium Enterprises Investment Limit<\/strong>: 10-50 crore INR <\/span><\/em><span data-text-color-mark=\"rgb(14, 16, 26)\"> The turn-over limit for Micro Enterprises: Less than 5 crore INR <\/span><\/li>\r\n<li dir=\"ltr\"><em><span data-text-color-mark=\"rgb(14, 16, 26)\"><strong>Small Enterprises Investment Limit<\/strong>: 1-25 crore INR <\/span><\/em><span data-text-color-mark=\"rgb(14, 16, 26)\"> The turn-over limit for Medium Enterprises: 25-250 crore INR.<\/span><\/li>\r\n<\/ul>\r\n<h3 dir=\"ltr\"><strong><span data-text-color-mark=\"rgb(14, 16, 26)\">4. How can I avail MSME loan?<\/span><\/strong><\/h3>\r\n<p dir=\"ltr\"><span data-text-color-mark=\"rgb(14, 16, 26)\">Individuals can easily avail of an <\/span><a href=\"https:\/\/razorpay.com\/learn\/business-banking\/qualify-for-msme-business-loan\/\" rel=\"noopener noreferrer nofollow\" data-factors-click-bind=\"false\"><span data-text-color-mark=\"#2E16E6\">MSME business loan<\/span><\/a><span data-text-color-mark=\"rgb(14, 16, 26)\"> by following the mentioned steps below <\/span><em><span data-text-color-mark=\"rgb(14, 16, 26)\"> Fill up the online application form for SME\/MSME loan to apply. <\/span><\/em><span data-text-color-mark=\"rgb(14, 16, 26)\"> Submit all the relevant documents to complete the process (KYC documents, address proof, business ownership proof, and financial documentation) * Get money in any bank within 24 hours.<\/span><\/p>\r\n<h3 dir=\"ltr\"><strong><span data-text-color-mark=\"rgb(14, 16, 26)\">5. How do you benefit from MSME?<\/span><\/strong><\/h3>\r\n<p dir=\"ltr\"><span data-text-color-mark=\"rgb(14, 16, 26)\">Here are the following benefits of registering MSME in India: <\/span><em><span data-text-color-mark=\"rgb(14, 16, 26)\"> You can avail of collateral-free bank loans <\/span><\/em><span data-text-color-mark=\"rgb(14, 16, 26)\"> You can easily acquire government tenders through the Udyam Registration Portal <\/span><em><span data-text-color-mark=\"rgb(14, 16, 26)\"> Protection against delayed payments <\/span><\/em><span data-text-color-mark=\"rgb(14, 16, 26)\"> SO Certification Charges Reimbursement<\/span><\/p>\r\n<h3 dir=\"ltr\"><strong><span data-text-color-mark=\"rgb(14, 16, 26)\">6. What are the types of MSMEs?<\/span><\/strong><\/h3>\r\n<p dir=\"ltr\"><span data-text-color-mark=\"rgb(14, 16, 26)\">According to the provisions of the MSMED (Micro, Small &amp; Medium Enterprises Development) Act of 2006, MSMEs are classified into two classes i.e. Manufacturing Enterprises and Service Enterprises. The enterprises are further categorized based on annual turnover and investment in equipment.<\/span><\/p>\r\n<h3 dir=\"ltr\"><strong><span data-text-color-mark=\"rgb(14, 16, 26)\">7. What is the UAM number?<\/span><\/strong><\/h3>\r\n<p dir=\"ltr\"><span data-text-color-mark=\"rgb(14, 16, 26)\">UAM is a registration form that constitutes a self-declaration format under which the MSME will self-certify its existence, bank account details, promoter\/owner&#8217;s identity details, and other information required. There\u2019s no fee for filing the UAM number.<\/span><\/p>\r\n<h3 dir=\"ltr\"><strong><span data-text-color-mark=\"rgb(14, 16, 26)\">8. Who is eligible for MSME?<\/span><\/strong><\/h3>\r\n<p dir=\"ltr\"><span data-text-color-mark=\"rgb(14, 16, 26)\">You are eligible for MSME if your business is a micro or small enterprise as per the MSME Act. This means your investment and turnover should be below certain limits.<\/span><\/p>\r\n<h3 dir=\"ltr\"><strong><span data-text-color-mark=\"rgb(14, 16, 26)\">9. What are the examples of MSME enterprises?<\/span><\/strong><\/h3>\r\n<p dir=\"ltr\"><span data-text-color-mark=\"rgb(14, 16, 26)\">Some examples of MSME enterprises are:<\/span><\/p>\r\n<ul dir=\"ltr\">\r\n<li>\r\n<p dir=\"ltr\"><span data-text-color-mark=\"rgb(14, 16, 26)\">Handicrafts and pottery<\/span><\/p>\r\n<\/li>\r\n<li>\r\n<p dir=\"ltr\"><span data-text-color-mark=\"rgb(14, 16, 26)\">Food processing and agro-based industries<\/span><\/p>\r\n<\/li>\r\n<li>\r\n<p dir=\"ltr\"><span data-text-color-mark=\"rgb(14, 16, 26)\">Textiles and garments<\/span><\/p>\r\n<\/li>\r\n<li>\r\n<p dir=\"ltr\"><span data-text-color-mark=\"rgb(14, 16, 26)\">Leather and footwear<\/span><\/p>\r\n<\/li>\r\n<li>\r\n<p dir=\"ltr\"><span data-text-color-mark=\"rgb(14, 16, 26)\">Engineering and electronics<\/span><\/p>\r\n<\/li>\r\n<li>\r\n<p dir=\"ltr\"><span data-text-color-mark=\"rgb(14, 16, 26)\">Pharmaceuticals and biotechnology<\/span><\/p>\r\n<\/li>\r\n<\/ul>\r\n<p>&nbsp;<\/p>\r\n","protected":false},"excerpt":{"rendered":"<p>On 1st June, the Union Cabinet headed by Prime Minister Narendra Modi revised the MSME definition by changing the investment and turnover figures. Read all about it here.<\/p>\n","protected":false},"author":151156444,"featured_media":11313,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3435],"tags":[3357,3543,1707],"class_list":{"0":"post-1716","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-gst-tax-government","8":"tag-msme","9":"tag-popular","10":"tag-startups"},"_links":{"self":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/1716","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/users\/151156444"}],"replies":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/comments?post=1716"}],"version-history":[{"count":52,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/1716\/revisions"}],"predecessor-version":[{"id":18639,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/1716\/revisions\/18639"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media\/11313"}],"wp:attachment":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media?parent=1716"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/categories?post=1716"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/tags?post=1716"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}