Revised definition of MSMEs for Atma-nirbhar Bharat Abhiyan

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Revised definition of MSMEs for Atma-nirbhar Bharat Abhiyan

Introduction

A robust MSME sector is key to improving the economic strength and resilience of the country and making it highly self-reliant and globally competitive. After our Prime Minister sent messages to the Nation on 'Atma-nirbhar Bharat Abhiyan', our Finance Minister had announced  announcing the first tranche of measures under the Atma Nirbhar Bharat stimulus package. In which, the definition of Micro, Small & Medium Enterprises (MSMEs) is revised with the expectation to give them the confidence to grow

Highlight of the new definition :- 

  • The distinction between manufacturing and services enterprises has been eliminated. 
  • The investment criteria for enterprises have been revised upwards, while an additional criterion of turnover has been introduced.
  • The manufacturing and services enterprises with investments up to Rs 1 crore and turnover up to Rs 5 crore will be classified as micro enterprises. 
  • The small enterprises, the investment criteria has been revised upwards to Rs 10 crore, with the turnover criteria of Rs 50 crore added to the mix. 
  • The enterprises with investment up to Rs 20 crore and turnover up to Rs 100 crore will be termed medium enterprises.

Why it as required?

MSME's, who were performed great, was always in fear that, if they outgrow the size of what is defined as an MSME, they may lose the benefits that they get as an MSME itself. Outgrowing this definition meant outgrowing and going out of receiving benefits. Therefore MSMEs preferred to remain within the definition rather than grow. With this revision now Government & Industries both can easily identify business category & Govt. can look GST data base to identify by turnover only. 

Impact 

Now, coming with a change in the definition of MSMEs, they need not worry about growing in size; they will still be able to get quite a lot of benefits which otherwise, as an MSME, they have got. 
This revision in the definition of MSMEs with an upward revision in their investment limit will help in the seamless expansion of small and medium businesses in the country. The upward revision in the investment limit of MSMEs will help bring an increased number of MSME units access to institutional working capital

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