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The Indian government defines micro, small and medium enterprises (MSMEs) under the MSMED Act 2006 based on investments in plant, machinery and equipment along with annual turnover thresholds. As per latest 2020 updates, micro firms have investments up to Rs 1 crore with turnover less than Rs 5 crore while small firms are capped at Rs 10 crore investments and Rs 50 crore revenue. Medium enterprises have upper bounds of Rs 50 crore investments and Rs 250 crore turnover. These metrics allow classification while availing schemes like easier loans, subsidies and special incentives promoting growth of MSMEs which offer over 120 million jobs.
**Refer this Gazette Notification**
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Micro, small and medium enterprises (MSMEs) form the vibrant backbone of India’s growing economy. These small-scale businesses are crucial drivers of innovation, employment opportunities and balanced economic development across urban and rural areas.
The importance of MSMEs cannot be overstated – they account for almost one-third of India’s GDP and around 45% of total manufacturing output while creating employment for around 120 million people. These small entrepreneurs have time and again shown the ability to innovate frugal solutions attuned to local conditions.
However, MSMEs often face issues around accessing formal credit channels, using modern technology, pan-India market linkage and navigating regulatory compliances. The government offers schemes and incentives focused specifically on facilitating the growth of the sector.
As India continues its economic development, increased governmental support coupled with private sector partnerships can tremendously empower MSMEs to realize their full potential. The goal is to support indigenous entrepreneurship and establish global Indian brands in the long run.
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Revised MSME Classification |
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Criteria |
Micro |
Small |
Medium* |
|
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Investment & Annual Turnover |
< Rs.1 crore & < Rs.5 crore |
< Rs.10 crore & < Rs.50 crore |
< Rs.50 crore & < Rs.250 crore |
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Here are some of the important terminologies related to MSMEs:
As discussed already, these are small scale businesses with investment ceilings in machinery and equipment as follows – Micro: Rs 1 crore; Small: Rs 10 crore; Medium: Rs 50 crore.
MSMEs involved in production or manufacturing activities are referred to as manufacturing enterprises. They could be in sectors like food processing, apparel, metalworking etc.
As the name suggests, these are MSMEs engaged in service offerings rather than goods production e.g. retail, hospitality, IT services, trade etc.
A separate stock exchange platform introduced by BSE and NSE in 2012 meant for small and medium enterprises to raise public equity and enhance visibility. It had limited success so far.
Credit Guarantee Fund Trust for Micro and Small Enterprises – a trust founded by the Indian government and SIDBI to enable collateral-free credit access for MSMEs.
A unique identity number issued to any MSME after registration. It ensures easy access to government schemes and priority sector loans.
‘Self-reliant India’ policy drive by the current government focusing on empowering domestic MSME capabilities.
A flagship entrepreneurship development campaign to foster an enabling ecosystem for tech/non-tech, rural/urban startups and boost MSME innovation.
Here are the key documents typically required for MSME registration in India:
Proof of identity of promoters/directors: Aadhaar card, PAN card, voter ID, driving license.
Proof of registered office address: Rent agreement, electricity/water bill, property papers.
Proof of date of commencement of business: Registration certificate under Shops and Establishments Act or any other document showing date of starting business operations.
Business activity proof: Registration under GST, trade license, IEC code, license from food and safety dept (as applicable).
Bank account details: Certificate of incorporation of current account in the name of the enterprise issued by bank.
Digital signature: To submit the MSME registration form online.
Entrepreneurs Memorandum (EM Part-II) duly filled and signed by the applicant.
Photos of directors/promoters
Proof of social category (SC/ST certificate) and women entrepreneurs, if applicable.
Details of investment in plant and machinery or equipment, as per MSME definition of manufacturing and services enterprise.
Along with these documents, the CA certificate, authorization letter, and other supplementary documents may be required based on the specific business activity.
Manufacturing Enterprises:
Service Enterprises:
Additional Key Points:
So in summary, the government fees range from Rs. 0 to Rs. 3000 based on the type (manufacturing/service) and size (micro/small/medium) of the MSME applying for UAM registration. Overall, the fee is very nominal.
Know More about this ServiceHere’s a guide to the MSME registration process in India, incorporating visuals for clarity:
Here are the key parties who can apply for an import export license:
Type of Organization:
Activity Area:
Investment in Plant and Machinery/Equipment:
Managerial Oversight:
Location of Operations:
Type of Product/Service:
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