SME Times News Bureau | 03 Jun, 2020
In a Gazette notification issued on Wednesday,
the (Micro, Small and Medium Enterprises (MSME) said that the new definition
and criterion of MSMEs will come into effect from 1st July, 2020.
Ministry officials said that the new definition
will pave way for strengthening and growth of the MSMEs.
Particularly, the provision of excluding the
exports from counting of turnover will encourage the MSMEs to export more and
more without fearing to loose the benefits of a MSME unit. This is expected to
exponentially add to exports from the country leading to more growth and
economic activity and creation of jobs, they said.
After 14 years since the MSME Development Act
came into existence in 2006, a revision in MSME definition was announced in the
Atmnirbhar Bharat package on 13th May, 2020.
As per this announcement, the definition of Micro
manufacturing and services units was increased to Rs. 1 Crore of investment and
Rs. 5 Crore of turnover.
The limit of small unit was increased to Rs. 10
Crore of investment and Rs 50 Crore of turnover. Similarly, the limit of medium
unit was increased to Rs. 20 Crore of investment and Rs. 100 Crore of turnover.
The Government of India on 01.06.2020 decided for
further upward revision of the MSME Definition. For medium Enterprises, now it
will be Rs. 50 Crore of investment and Rs. 250 Crore of turnover.
The existing criterion of definition of MSMEs is
based on the MSMED Act, 2006. It was different for manufacturing and services
It was also very low in terms of financial
limits. Since then, the economy has undergone significant changes.
After the package announced on 13th May, 2020,
there were several representations saying that the announced revision is still
not in line with market and price conditions and hence it should be further
Keeping in mind these representations, Prime
Minister decided to further increase the limit for medium Units.
This has been done in order to be realistic with
time and to establish an objective system of classification and to provide ease
of doing business.
Also, a new composite formula of classification
for manufacturing and service units has been notified. Now, there will be no
difference between manufacturing and service sectors. Also, a new criterion of
turnover is added.
Detailed Guidelines and Clarifications as regards
the classification in pursuance of the changed definition are being issued
separately by the MSME Ministry.
Ministry of MSME has reiterated that it has put
in place a very strong handholding mechanism for MSMEs and new entrepreneurs in
the name of Champions (www.champions.gov.in) which was recently launched by the
Interested Enterprises/People can take benefit of
this mechanism and can also put their queries or complaints. The same will be
attended to with utmost promptness.