The Indian Government, with a hope to create up to five crore jobs in the MSME or Micro, Small and Medium Enterprise sector, revised the definition. Now, the turnover of a company defines its MSME status and not the investment being put into it. The move comes as part of efforts by the Government under the Atmanirbhar Bharat Abhiyaan move. 

The turnover figures and the investment were rehashed to much larger values, and this resulted in the creation of more medium-sized enterprises.  

Union Minister Nitin Gadkari said the revised definition would grant a more unified description for things related to investment, taxations and many more. The newly changed definition was supposed to be implemented via an amendment which would help refine the overall scenario for Indian businesses. 

What are the changes in the new schemes?

The Government’s MSME Ministry issued a public notification to make the changes to the MSME definition. The new criterion and definition will come into effect from the 1st of July, 2020. 

As per the new notification, the definition of the units for Micro manufacturing and services was increased to an amount of Rs. 1 Crore of investment, followed by Rs. 5 Crores of turnover. The small unit limits were increased to Rs. 10 Crores for investment and Rs. 50 Crores for turnover. The limit for the medium units were also increased – with investment being Rs. 20 Crores and Rs. 100 CR and 250 CR for turnover.

Earlier, the MSMEs were classified into categories – the service and manufacturing enterprises. Now, they’re both removed and are the same. 

The new notifications specifies the procedures and the forms for filing the memorandum, namely –

  • The composite criteria for the turnover of classification and the investment
  • Calculation of the investment required for machinery, equipment or plants
  • Turnover calculation
  • Process Registration
  • Registration of any existing enterprises
  • Updation of the information and the overall transition period in classification
  • Facilitation and the grievance redressal for enterprises. 

Here is a consolidated list for the Revised Classifications for MSMEs –


Revised MSME Classification
S. No. Enterprises Investment in and Turnover Limit
(i) Micro Enterprises Investment in plant and machinery or equipment. (<Rs. 1 crore)
The turnover (<Rs. 5 crore)
(ii) Small Enterprises Investment in plant and machinery or equipment (<Rs. 10 crore)
Turnover (<Rs. 50 crore)
(iii) a Medium Enterprise Investment in plant and machinery or equipment (<Rs. 50 crore)
Turnover (<Rs. 250 crore)


What are the other announcements based on the Atma-Nirbhar Bhiyaan –

  • Rs. 50,000 Crore infusion of equity through the MSME Funds
  • Rs. 3,00,00,000 automatic loans for MSMEs which are collateral-free
  • Rs. 20,00,00,000 debt for subordinate for MSMEs
  • Extension of the completion date and registration for the RERA projects for real estate
  • Pending issuance of refunds to non-charitable trusts
  • Extension of due date for the Income Tax Return to November 30, 2020

The new MSME rules as per the new notifications can be viewed on the Udyam Registration Portal. You can head over and check if your company comes under the criteria needed for MSMEs.

Head over to FinGurus to understand everything about MSMEs and how you can begin your application for the same.