New Delhi, Nov 22 (KNN) Indian Industries Association (IIA) has said that they are not in favour of 'Turnover based definition' of Micro Small and Medium Enterprises (MSMEs) as the later won't be benefitted with such definition.

IIA said MSMEs are the backbone of Indian economy. 6.34 crore MSME’s contribute 30% to the GDP of India and gives direct employment to 11.10 crore people.  

IIA with more than 8000 direct MSME Members learnt that Ministry of MSME, Government of India is proposing to change the  MSME definition in the ongoing Parliament Session from “Investment in plant & machinery/equipment bases” to “Turnover bases” where as per the proposal, any unit with a turnover of up to Rs 5 crore will be classified as a micro enterprise, while those with up to Rs 75 crore annual revenue will be in the small category unit. Similarly, enterprises with turnover of up to Rs 250 crore will be classified as medium-scale enterprises.

However, IIA cited following reasons for being against for the proposed definition and said, ''On this proposed change of definition of MSME, IIA in consultation with its members observed that the proposed “Turnover Based Definition” of MSME’s is not in favour of majority of MSME’s.''

''The existing criteria of investment in Plant and Machinery/ Equipment for defining MSME’s in Manufacturing & Service Sector is still relevant. However, the existing investment limits may be doubled because this limit was decided in 2006 and in past 13  year’s the price index has escalated significantly,'' IIA added.

IIA therefore submitted the following proposal Gadkari where any unit with turnover of upto Rs 50 lakh will be considered as a micro enterprise, while those with up to Rs 10 crore annual revenue will be in the small category unit. Similarly, enterprises with turnover of up to Rs 20 crore will be classified as medium-scale enterprises.

''Incentive scheme may be introduced for the enterprises for upgrading its category from Micro to Small, Small to Medium and Medium to Large in terms of say income tax rebate  @5% for minimum 3 years. This will help in boosting investments in the MSME Sector and create more jobs,'' IIA asserted.

However, IIA also said that if government is adamant to MSME Definition to turnover bases, then the maximum turnover for Micro, Small &  medium enterprises should not be more than Rs 5 Crore, 25 Crore & Rs 75 Crore respectively in manufacturing sector and Rs 2 crore, 10 crore & Rs 50 crore for  Service sector.  

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