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Classification of Micro Small and Medium Enterprises

Definitions of Micro, Small & Medium Enterprises In accordance with the provision of Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 the Micro, Small and Medium Enterprises (MSME) are classified in two Classes- (1) Manufacturing Units and (2) Service Units

MSME sector has been raising a demand for revision / amendment in the MSME definition. Now the Cabinet has approved a draft which proposes to change the definition of MSMEs. Now the definition has changed classification of MSME from Investment in Plant & Machinery to define MSMEs on the basis of annual sales turnover. There is no distinction between manufacturing and service units.


The revised classification of MSME is Turnover based-


Micro Enterprises

Small Enterprises

Medium Enterprises

Manufacturing Units/Service Units

Turnover up to Rs. 5.00 Crore

Turnover Rs. 5.00 crore to 75.00 crore

Turnover Rs. 75.00 crore to Rs. 250 Crore



Earlier these were classified based on investment in Plant & Machinery (excluding investments in land and building)-


Micro Enterprises

Small Enterprises

Medium Enterprises

Manufacturing Units

Investment up to Rs. 25.00 lakh

Investment from Rs. 25.00 lakh to Rs. 5.00 Crore

Investment from Rs. 5.00 Crore to Rs. 10.00 Crore

Service Units

Investment up to Rs. 10.00 lakh

Investment from Rs. 10.00 lakh to Rs. 2.00 Crore

Investment from Rs. 2.00 Crore to Rs. 5.00 Crore


Benefits of MSME Registration

  1. Higher creditability- MSME registered units get higher preference as compared to non-registered units.
  2. Lower rate of Interest- the bank loans become lower than interest on regular loans.
  3. Tax Rebate- There are various tax rebates offered to MSME.
  4. MAT credit utilized enhanced- It also allowed credit for minimum alternate tax (MAT) to be carried forward for up to 15 years instead of 10 years
  5. Opportunities like apply to government tenders etc.


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