New Criteria for Classification of Micro, Small and Medium Enterprises

The Ministry of Micro, Small and Medium Enterprises, by way of its Notification dated June 1, 2020, has introduced new criteria for classification of micro, small and medium enterprises, under the Micro, Small and Medium Enterprises Development Act, 2006, on the basis of (a) investment by enterprises in plant and machinery or equipment; and (b) their turnover in the manner set out below. Previously, the criteria was separate for enterprises in the manufacturing sector and those in the services sector and was only on the basis of investment in plant machinery or equipment – pursuant to this amendment, the criteria for classification has been harmonized for enterprises in both these sectors. The new criteria for classification of micro, small and medium enterprises pursuant to the Notification are as follows:

i.     Micro enterprises: investment in plant and machinery or equipment up to INR one crore and turnover up to INR five crore;

ii.   Small enterprise: investment in plant and machinery or equipment up to INR 10 crore and turnover up to INR 50 crore; and

iii.  Medium enterprise: investment in plant and machinery or equipment up to INR 50 crore and turnover up to INR 250 crore.

 This Notification has come into effect from July 1, 2020.

Published In:Inter Alia - Quarterly Edition - June 2020 [ English
Date: June 30, 2020