Cabinet Clears Change In MSME Definition, Revises Investment Limit Upwards

Union Cabinet headed by Prime Minister Narendra Modi on Monday approved tweaking definition of micro, small and medium enterprises (MSMEs) as part of measures to provide relief to MSMEs. While announcing change in definition for MSMEs Union Minister Nitin Gadkari said, “there are 6 crore registered MSMEs in the country which provide jobs to over 11 crore people and contribute 29 per cent to the GDP.”

The government has changed the definition for classification of MSMEs. As per the new definition, if a company has invested Rs 1 crore and earns turnover of Rs 5 crore, it will be classified as a micro company.

Likewise, a company has invested Rs 10 crore and has a turnover of Rs 50 crore will be classified as a small enterprise.

For a medium enterprise investment limit has been increased to Rs 50 crore and turnover has been hiked to Rs 250 crore.

Mr Gadkari added that the earlier distinction between a manufacturing enterprise and a service company has also been removed.

Export revenue for micro, small or a medium enterprises will not be included while classifying the company as one of them.

The government also approved creating a fund of funds with an initial corpus f Rs 10,000 crore to help MSMEs, which have good track record, get list on the stock exchanges to raise capital.

The fund of funds will eventually go up to Rs 50,000 crore, Mr Gadkari said.

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