MSME (Micro, Small, Medium Enterprise): Definition, Meaning & Guide for Indian Businesses

MSME stands for Micro, Small, and Medium Enterprises. The classification is based on investment in plant/machinery and annual turnover.

What is MSME (Micro, Small, Medium Enterprise)?

MSME stands for Micro, Small, and Medium Enterprises. Under the MSMED Act 2006 (revised in 2020), the classification is based on both investment and turnover. Micro: investment up to ₹1 crore AND turnover up to ₹5 crore. Small: investment up to ₹10 crore AND turnover up to ₹50 crore. Medium: investment up to ₹50 crore AND turnover up to ₹250 crore. Both manufacturing and services are covered under the same definition. MSMEs get various benefits: lower interest rates on loans, government tender preferences, protection under Section 43B(h) of the Income Tax Act requiring buyers to pay them within 45 days, easier compliance, and access to schemes like ECLGS, CGTMSE.