Meaning and Definition & Classification of MSME

Meaning of MSME

Meaning and Definition of MSME – The Indian Micro, Small & Medium-Scale Enterprises (MSME) sector is the backbone of the national economic structure and has unremittingly acted as the bulwark for the Indian economy, providing it resilience to ward off global economic shocks and adversities. With around 63.4 million units throughout the geographical expanse of the country, MSMEs contribute around 6.11% of the manufacturing GDP and 24.63% of the GDP from service activities, as well as 33.4% of India’s manufacturing output. They have been able to provide employment to around 120 million people and contribute around 45% of the overall exports from India. The sector has consistently maintained a growth rate of over 10%. About 20% of the MSMEs are based in rural areas, which indicate the deployment of significant rural workforce in the MSME sector and is an exhibit of the importance of these enterprises in promoting sustainable and inclusive development as well as generating large scale employment, especially in rural areas. Definition Classification of MSMEs Recently, announcement from the Finance Ministry has been made for revision of eligibility criteria to be registered under MSMEs and done away with the distinction between manufacturing and services sector which will be notified very soon. As per the revised definition, any firm with investment up to Rs. 1 Crore and turnover under Rs.5 Crore will be classified as “Micro”. An organization with an investment upto Rs.10 Crore and turnover upto Rs.50 Crore will be classified as “Small” and a firm with investment upto Rs. 50 Crore and turnover under Rs. 250 Crore will be classified as “Medium”.

Definition of MSME

Following is the definition of MSME

vised Classification of MSME applicable w.e.f 1st July 2020

Composite Criteria: Classification of MSME on the basis of Investment in Plant & Machinery/equipment and Annual Turnover