The existing MSME classification was based on the criteria of investment in plant and machinery or equipment. So, to enjoy the MSME benefits, the MSMEs have to limit their investment to a lower limit, as mentioned below:

                                Existing MSME Classification

• Sector

• Criteria

• Micro

• Small

• Medium

• Manufacturing

• Investment 

< Rs.25 lakh

< Rs.5 crore

< Rs.10 crore

• Services

• Investment 

< Rs.10 lakh

< Rs.2 crore

< Rs.5 crore

These lower limits are killing the urge to grow as they are unable to scale their businesses further. Also, there has been a long-pending demand for the revision of MSME classification so that they can further expand their operations while continuing to avail the MSME benefits.

Now, under the Aatmanirbhar Bharat Abhiyan (ABA), the government revised the MSME classification* by inserting composite criteria of both investment and annual turnover. Also, the distinction between the manufacturing and the services sectors under the MSME definition has been removed. This removal will create parity between the sectors. The following is the revised MSME classification*, where the investment and annual turnover, both are to be considered for deciding an MSME.

                            Revised MSME Classification

• Criteria

• Micro

• Small

• Medium*

Investment 

       & 

Annual Turnover

< Rs.1 crore

 &  

< Rs.5 crore

< Rs.10 crore

&

< Rs.50 crore

< Rs.50 crore

&

< Rs.250 crore

* Further upward revision made by the government