Centre widens definition of MSMEs, raises investment limits

Addressing the media here, Finance Minister Nirmala Sitharaman said the additional criteria of turnover has also been introduced for recognition of an MSME.

Further, the government has also done away with the distinction of services and manufacturing MSME.

As per the new changes, businesses with investment of less than Rs 1 crore and turnover of Rs 5 crore would be classified as micro enterprises. Under the existing criteria, a company with investment of less than Rs 25 lakh in the manufacturing sector and less than Rs 10 lakh in the services sector were considered micro enterprises.

The investment limit of small enterprises has been increased to Rs 10 crore, and the companies would have to have turnover of less than Rs 50 crore.

Further, the investment limit for medium enterprises has been increased to Rs 20 crore and the turnover limit has been kept at Rs 100 crore.

Sitharaman said that the necessary amendments to laws will be brought about to give effect to the changes.

Among other measures for MSMEs, she also announced a collateral free automatic loans for businesses including MSMEs up to Rs 3 lakh crore.

Under the measure, borrowers with up to Rs 25 crore outstanding and Rs 100 crore turnover would be eligible for the special collateral free loan.