By introducing beneficial financial packages, the central government is redefining the prospects for MSME sectors. General opinion is that micro, small and medium enterprises may benefit hugely out of this. The gesture of classifying enterprises on the basis of the amount of money invested, will be replaced by distinguishing them on the basis of turnover. More importantly, the MSME sector will no longer be split into manufacturing and service sector.
Ventures with investments of up to Rs 1 crore and annual turnover below Rs 5 crore will be considered as micro enterprises. Earlier, the micro segment included enterprises who had paid up to Rs 10 lakh on service, and those who had invested Rs 25 lakh on manufacturing.
Small enterprises will include enterprises with investments of up to Rs 10 crore and annual turnover below Rs 50 crore. Earlier, the category included those who had paid up to Rs 2 crore in service sector and who had invested up to Rs 5 crore in manufacturing.
The enterprises with investments of up to Rs 20 crore and annual turnover of up to Rs 100 crore will be seen as medium enterprises. Earlier, medium enterprises were considered to be the ones who spent Rs 5 crore in service sector and invested Rs 10 crore in manufacturing.
The need to change the MSME definition has been a requirement of entrepreneurs for long. There wont be complaints regarding loss of benefits along with changing investments. With turnover being considered, entrepreneurs can move forward without losing any benefits.
