PHD chambers urges government to change MSME definition

New Delhi, Dec 24 (KNN) The PHD Chamber of Commerce & Industry (PHDCCI) has urged the government  to change definition of micro, small and medium enterprises (MSMEs) on the basis of turnover to boost growth.

The proposed definition "defines a micro enterprise as a unit where the annual turnover does not exceed Rs 5 crore, a small enterprise as a unit where the annual turnover is more than Rs 5 crore but does not exceed Rs 75 crore and a medium enterprise as a unit where the annual turnover is more than Rs 75 crore but does not exceed Rs 250 crore".

According to D K Aggarwal, President, PHD Chamber of Commerce and Industry, the MSME sector is critical in meeting the national objectives of generating employment, reducing poverty and slowing rural-urban migration.

''The proposed definition will help in directing the benefits of economic growth to the intended beneficiaries,'' he said in a statement.

At present, the definition, based on investment in plant and machinery for manufacturing MSMEs and investment in equipment for service sector MSMEs was introduced in the year 2006 through the Micro, Small and Medium Enterprises Development Act.

Notably, in November this year, IIA and LUB, both had shown their disagreement over the proposed MSME definition citing that MSME won't be benefitted.

''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,'' IIA had said.

While on the other hand LUB's State president of Laghu Udyog Bharati, S Surulivel had said, ''If the Government makes changes in the definition, which is proposed to be based on the turnover of each unit, several micro or medium-scale units can be classified as a small-scale unit and larger industries will come under the medium category. This will lead to higher competition for micro and small-scale units. Therefore, the handholding and benefits extended by the Government will benefit the larger and medium-scale units rather than the micro and small-scale ones.''

MSMEs contribute around 32 per cent in gross value added, employ around 111 million people and have a contribution of more than 48 per cent in total exports of India.

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