MSMEs' new classification to be effective from July: Revised criteria announced
An upward revision
The new definition and criterion will come into effect from 1 July, 2020," the official statement said.
'Medium' enterprise category
According to the revised criteria, a unit with Rs 50 crore of investment and Rs 250 crore of turnover will fall under the 'medium' enterprise category. The existing criterion of definition of MSMEs is based on the MSMED Act, 2006.
'Micro' and 'small' enterprise category
How is it different from previous classification
Previously, it was different for manufacturing and services units. It was also very low in terms of financial limits.
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 revised upwardly.
"This is expected to exponentially add to exports from the country leading to more growth and economic activity and creation of jobs," an official statement said.
Significance of MSMEs on Indian economy
The Prime Minister has decided to further increase the limit for medium Units. This has been done in order to establish an objective system of classification and to provide ease of doing business.