MSME is the acronym for Micro, Small and Medium Enterprises. MSMEs are integral to the development of India’s socio-economic environment.  

As per the Government of India website, the MSME sector has contributed to around 45% of the country’s total industrial employment, 50% of India’s total exports and 95% across all industrial units, with over 6000 diverse products being manufactured by MSME industries. MSME applies only to manufacturing and service industries with trading companies being excluded from the scheme, as trading companies only are the intermediary between the manufacturer and the consumer. 

Businesses under MSME

According to provisions of MSMED Act 2006, businesses which can come under the purview of the Act are based on their definition and categorization under either Manufacturing Enterprises or Service Enterprises; and the registration policy relevant to Central government and State governments.

Manufacturing Enterprises 

  • Engage in the manufacture and production of goods
  • Defined with relevance to investment in plant and machinery
  • Examples include energy-efficient pumps, engineering and fabrication, auto part components etc.

Service enterprises

  • Engage for providing of services and defined in 
  • Defined with relevance to investment in equipment
  • Examples include servicing for agricultural farm equipment, IT service provider etc.

Eligibility criteria for MSME scheme

As per the notification issued by Ministry of Micro, Small and Medium Enterprises, which came into effect on 01.07.2020, to qualify for the MSME scheme, industries have to meet the below eligibility criteria.

Micro-Enterprise

  • Investment in plant and machinery/ equipment should not exceed Rs. 1 crore, and
  • Turnover should not exceed Rs. 5 crores

Small-Enterprise

  • Investment in plant and machinery/equipment should not exceed Rs. 10 crores, and
  • Turnover should not exceed Rs. 50 crores

Medium-Enterprise

  • Investment in plant and machinery/equipment should not exceed Rs. 50 crores, and
  • Turnover should not exceed Rs. 250 crores

Points to Remember: 

MSMEs are significant for the economic and social development of India.

MSMEs generate immense employment opportunities.

MSMEs help in the development of India’s rural landscape.