Explained: New definition of MSMEs and how it is different from earlier
Explaining the new definition, Nirmala Sitharaman said the government has decided to remove the difference between the definition of manufacturing-based MSMEs and service-based MSMEs.
In Short
- Difference between definition of manufacturing and service-based MSMEs removed
- Threshold limit to define an enterprise as an MSME increased
- Turnover added as another criteria to define MSMEs, besides investment scale
Finance Minister Nirmala Sitharaman today announced that the central government has decided to change the definition of MSMEs (Micro, Small and Medium Enterprises). Announcing this in her press conference, Nirmala Sitharaman said this change is in "favour of the MSMEs".
The Finance Minister said the definition is being changed because the low threshold limit in the old definition of MSMEs created a "fear" among them that if they expand further, they may lose the benefits that MSMEs enjoy. She said this has been "killing the urge to grow" among the MSMEs, adding that this has been a long-pending demand from the sector.
Explaining the new definition, Nirmala Sitharaman said the government has decided to remove the difference between the definition of manufacturing-based MSMEs and service-based MSMEs.
The other change that has been introduced is to add turnover as another measure to define an MSME. So far, MSMEs were defined based on their scale of investments.
The following table explains the exisiting and revised definition of MSMEs:
Nirmala Sitharaman said the government will make necessary changes in law to revise this definition.
ALSO READ | Covid-19 package: Rs 3 lakh crore collateral-free loans to MSME, says Nirmala Sitharaman
ALSO READ | No global tenders for govt purchases up to Rs 200 crore, says FM Nirmala Sitharaman
ALSO WATCH | From call for self-reliance to Rs 20 lakh crore package, watch PM Modi's full speech