Govt’s decision to redefine MSMEs on basis of turnover good move, will help sector: IIA

New Delhi, Feb 8 (KNN) In bid to facilitate ease of doing business in the country, the Union Cabinet chaired by PM Modi approved change in the basis of classifying Micro, Small and Medium enterprises from ‘investment in plant & machinery/equipment’ to ‘annual turnover’, responding to the announcement, MSME Modi Indian Industries Association has welcomed the decision.

Talking to KNN, Sunil Vaish, President of IIA said that the demand of changing the criteria have been long due and the MSMEs were expecting the announcement since long.

Vaish informed that the classification based on investment did not have much substantial meaning and was out dated.

Citing example he said that there are MSMEs that have a 5 crore investment and Is registering a turnover of 120 crores from it, likewise there are micro level units that hit sales up to 20 lakhs, the field to classify had been uneven.

Vaish said that with the coming of GST and a level playing field coming into play, it was essential to come up with the revision of the criteria.

Responding to the question whether the new definition will result in the higher turnover units grab benefits meant for the MSMEs, Vaish said that there is a chance of such perception, but on the larger front it is to yield good results for the sector in total.

V.K. Agarwal, Past President of Federation of Indian Micro and Small & Medium Enterprises (FISME) , said the maximum turnover limit of 250 crore is on the higher side and may allow larger companies to corner benefits meant for MSMEs.

The demand of the industry had been to hit the turnover mark of 50 crores, this could have helped the small units avail the benefits meant for the MSMEs, Agarwal said.

According to the government’s new definition, businesses with revenue of as much as 5 crore will be called a micro enterprise, those with sales between 5 crore and 75 crore will be deemed as small and those with revenue between 75 crore and 250 crore will be classified as medium-sized enterprises.

Under the earlier definition, manufacturers with 25 lakh investment in plant and machinery were termed micro enterprises and those with investments between 25 lakh and 5 crore were regarded as small enterprises.

Firms with investments of up to 10 crore are classified as medium.  (With PIB Inputs) (KNN/DA)