Finance Minister Announced New Definition Of MSME 2020

Finance Minister Announced New Definition Of MSME 2020


The investment criteria for the micro, small, and medium enterprises have been revised and annual turnover criteria are introduced in order to provide a difference between manufacturing and service enterprises. The central government has revised the earlier definition for MSME and has provided them with the confidence to grow gradually.

The government of India has announced the new process of MSME registration known as Udyam Registration.The new MSME definition has provided a specific differentiating mark between the manufacturing and service enterprises. Relation of specific terms has been done and additional criteria regarding the turnover have also been added in order to mark the differences.

Most of the older organizations which were associated with the sector had this fear that if they outgrow their size and increase the turnover they will stop receiving the benefits of MSMEs. Thus, the ministry has decided to remain within a specific definition rather than implementing growth procedures. Now, the organizations do not have to worry about growing in size because they can receive the benefits under this sector as well. Finance Minister Nirmala Sitharaman has reassured all the business people in India.

Under the new MSME definition of Udyam, Under the new definition of Udyam, manufacturing services and other such enterprises are classified according to Turnover & Investment in plant and machinery or equipment in the related sector.

The enterprises that have investments up to 1 crore rupees and a turnover of 5 crore rupees can be classified as micro-enterprises

The small enterprises can be defined with the investment criteria of 10 crore rupees and the turnover of 50 crore rupees.

The medium enterprises are defined by 50 crore rupees of investment and turnover of a two-fifty (250) crore rupees. These are the major changes that have been introduced in order to classify the manufacturing and service-providing enterprises.


Latest Definition Needs - Udyam Registration


The Central Government has defined the new process of Udyam registration in order to ensure the businesses which are already under the micro, small and medium enterprises that they are not going to lose their benefits even if their turnover increases with time. This has been an excellent gesture for the enterprises which have helped the business people who are associated with this sector. It has been very necessary to them that they don’t lose their loan facilities even if their business starts to expand.

There were different changes that were introduced into the MSME sector in the previous times. This is mostly because the registration procedure was required to be changed once the turnover of a business started to increase. This has introduced fear into the minds of the business people that if their business starts to expand, they can no longer access the benefits which are specially designed for a specific sector. This step of the central government has been greatly appreciated in this sector because the margins of the MSME sector had been increased which is one of the main benefits of Udyam registration. The classification regarding the new statement can be defined as follows:


New MSME Classification Under Udyam


The new MSME classification has different criteria for the divisions of micro, small, and medium sectors. The classification based on the MSME latest definition is presented below:

  • Micro Industries

  • The micro industries are defined as those that invest up to the amount of 1 crore rupees and receive a turnover of 5 crore rupees annually. These investment and turnover options can define the scope of the micro industries in India.

  • Small Industries

  • The small industries are defined as those that invest up to 10 crore rupees and receive over 50 crore rupees as their turnover on an annual scale. The government has increased the margin of small industries significantly in order to help the business people who are already involved in this trade.

  • Medium Industries

  • The medium industries are defined as those that invest up to 50 crore rupees and receive a turnover of 250 crore rupees on an annual scale. The margins of the medium industries of India have also been increased in order to help the business people of this sector.

    These are some of the major classifications which have been introduced over time by the Central Government of India in order to help the business people who are associated with the trade within the micro, small, and medium enterprises. These changes were extremely essential to include in order to sustain the economic system of the country and enhance the financial conditions of the business people who are associated with low trade.


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