Government Changes MSME Definition, Revises Investment Limit Upwards

The government on Wednesday changed the definition of micro, small and medium enterprises (MSMEs) as part of the Atma Nirbhar Bharat Abhiyan (self-reliant India) economic relief package announced by Prime Minister Narendra Modi on Tuesday.

"Definition of MSMEs is being changed in favour of MSMEs," Finance Minister Nirmala Sitharaman said while providing details of the government's Rs 20 lakh crore economic relief package to spur growth which has been hit hard by the COVID-19 induced lockdown.

The new definition of MSMEs does not differentiate between a manufacturing enterprise and a service sector enterprise, Ms Sitharaman said.

From now on, a company with an investment of up to Rs 1 crore and turnover of Rs 5 crore will be a micro company. Earlier, a service sector company with investment of up to Rs 10 lakh and a manufacturing company with investment of Rs 25 lakh was defined as a micro company.

Likewise, a company with an investment of up to Rs 10 crore and turnover of Rs 50 crore has been defined as a small company and a company with investment of up to Rs 20 crore and turnover of Rs 100 crore has been defined as a medium company.

Among other relief measures for the MSMEs, government also disallowed global tenders for government procurement of up to Rs 200 crore.