MSME new definition, criterion will come into effect from July 1st: MSME Ministry
New Delhi, Jun 3 (KNN) The new definition and criterion of Micro Small and Medium Enterprises (MSMEs) will come into effect from July 1st, 2020, said MSME Ministry in an official statement, on Wednesday.
''MSME Ministry has also issued Gazette notification to pave way for implementation of the upward revision in the definition and criteria of MSMEs in the country,'' the statement added.
After 14 years since the MSME Development Act came into existence in 2006, a revision in MSME definition was announced in the Atmnirbhar Bharat package on 13th May, 2020.
As per this announcement, the definition of Micro manufacturing and services units was increased to Rs 1 crore of investment and Rs 5 crore of turnover. The limit of small unit was increased to Rs 10 crore of investment and Rs 50 crore of turnover. Similarly, the limit of medium unit was increased to Rs 20 crore of investment and Rs 100 crore of turnover.
Later, on June 1st, the government of India for medium enterprises, increased the limit for investment to Rs 50 crore and for turnover, the limit was increased to Rs 250 crore.
The existing criterion of definition of MSMEs is based on the MSMED Act, 2006 and it was different for manufacturing and services units. It was also very low in terms of financial limits.
After the package announced on May 13th, there were several representations saying that the announced revision is still not in line with market and price conditions and hence it should be further revised upwardly.
''Keeping in mind these representations, Prime Minister decided to further increase the limit for medium Units. This has been done in order to be realistic with time and to establish an objective system of classification and to provide ease of doing business,'' the statement said.
The statement further said that a new composite formula of classification for manufacturing and service units has been notified adding ''Now, there will be no difference between manufacturing and service sectors. Also, a new criterion of turnover is added.''
''The new definition will pave way for strengthening and growth of the MSMEs. Particularly, the provision of excluding the exports from counting of turnover will encourage the MSMEs to export more and more without fearing to lose the benefits of a MSME unit,'' statement quoted Ministry officials as saying.
''This is expected to exponentially add to exports from the country leading to more growth and economic activity and creation of jobs,'' officials added.
Detailed guidelines and clarifications as regard the classification in pursuance of the changed definition are being issued separately by the MSME Ministry, it said.
Ministry of MSME has reiterated that it has put in place a very strong handholding mechanism for MSMEs and new entrepreneurs in the name of Champions (www.champions.gov.in) which was recently launched by the Prime Minister.
Interested enterprises and people can take benefit of this mechanism and can also put their queries or complaints. The same will be attended to with utmost promptness.