The government plans to amend the Micro, Small & Medium Enterprises Development Act to allow it to change the definition of a MSME to one based on turnover. This move could allow more businesses to register as MSMEs and be eligible for certain government schemes. The Union Government has been promoting the MSME sector and believes that it will lead the next phase of India’s economic growth.
The new government proposal would classify a MSME as a business with an annual turnover up to Rs 5 crore ($752,000) and businesses with up to Rs 75 crore annual turnover as a “small unit”. Businesses with up to Rs 250 crore in annual revenue would be classed as “medium scale” businesses. The MSME Ministry is currently finalising the proposal. As many handicraft, artisan, textiles, and fashion businesses’ revenue amounts to Rs 5 crore or less annually, the proposed definition could have a bearing on how such businesses are classified.
