MSME stands for Micro, Small and Medium Enterprises. In a developing country like India, MSME industries are the backbone of the economy.
The MSME sector contributes to 45% of India’s Total Industrial Employment, 50% of India’s Total Exports and 95% of all industrial units of the country and more than 6000 types of products are manufactured in these industries (As per msme.gov.in). When these industries grow, the economy of the country grows as a whole and flourishes. These industries are also known as small-scale industries or SSI’s.
What are Micro, Small and Medium Enterprise?
The existing MSME classification was based on the criteria of investment in plant and machinery or equipment. So, to enjoy the MSME benefits, the MSMEs have to limit their investment to a lower limit, as mentioned below:
|Existing MSME Classification|
|Manufacturing||Investment||< Rs.25 lakh||< Rs.5 crore||< Rs.10 crore|
|Services||Investment||< Rs.10 lakh||< Rs.2 crore||< Rs.5 crore|
These lower limits are killing the urge to grow as they are unable to scale their businesses further. Also, there has been a long-pending demand for the revision of MSME classification so that they can further expand their operations while continuing to avail the MSME benefits. Now, under the Aatmanirbhar Bharat Abhiyan (ABA), the government revised the MSME classification* by inserting composite criteria of both investment and annual turnover. Also, the distinction between the manufacturing and the services sectors under the MSME definition has been removed. This removal will create parity between the sectors. The following is the revised MSME classification*, where the investment and annual turnover, both are to be considered for deciding an MSME.
|Revised MSME Classification|
|Investment & Annual Turnover||< Rs.1 crore & < Rs.5 crore||< Rs.10 crore & < Rs.50 crore||< Rs.50 crore & < Rs.250 crore|
Documents Required for MSME Registration
The entity has to submit documents like business address proof, copies of purchase and sale bill, and licenses from regulatory bodies.
- Business Address Proof
- Copies of Sale Bill and Purchase Bill
- Partnership Deed/ MoA and AoA
- Copy of Licenses and Bills of Machinery Purchased