MSME: Definition & Context

 MSME stands for Micro, Small, and Medium Enterprises in India.

 Governed by the MSMED Act, 2006, these enterprises span

manufacturing, services, and—since 2021—also include wholesale and
retail trade.

Classification (2020 Composite Criteria)

The modern MSME framework uses both investment in plant/machinery

and annual turnover for uniform classification across sectors.

✅ Eligible Entities

 Includes startups, sole proprietorships, private limited companies,

LLPs, partnerships, SHGs, trusts, and cooperatives—so long as turnover
and investment thresholds are met.

✅Not eligible

 businesses in fisheries, forestry, extraterritorial bodies, gambling

ventures, and domestic household staffing.

⚙️Key Features & Benefits

 Promotes export of region-specific handicrafts (e.g., khadi, handloom).

🌟 Economic Impact

MSMEs account for roughly 42.7% of India’s exports (as of August

2022). In FY22 Indian MSME exports to US alone was USD 54.7
billion while its exports to UAE was valued at USD 13.4 billion.

 Drives employment and entrepreneurship alongside upskilling

initiatives.

🌟 Economic Impact

They employ about 40% of the workforce—especially in rural areas

—fostering entrepreneurship and innovation.
List of businesses that fall under MSME includes the following:

1. Leather products

2. Moulding of products like combs, umbrella frames, plastic toys, etc.

3. Natural fragrances and flavours

4. Placement and management consultancy services

5. Training and educational institute

6. Energy efficient pumps

7. Xeroxing

8. Beauty parlour and crèches.

9. Auto repair services, and garages.

10. X-ray clinics

11. Equipment rental and leasing

12. Photographic lab

13. Servicing of agricultural farm equipment including tractor, pump

repairing, ring boring machine

14. Back-office operation relating to computerised data

15. STD/ISD booths

16. Retail trade business with low capital

17. Multi-channels dish cable TV With dish antenna

18. Laundry and dry cleaning

19. Toughened metallic ware

20. Automotive electronic component products

21. Electronic surveillance and security

22. Mechanical engineering like steel almirahs, cocks, and valves,

wire cutters, etc.

23. Engineering and fabrication

24. Recorders, VCRs, radios, transformers, motors, and watches

25. Micronutrients for plants

26. Active pharmaceutical ingredients and ayurvedic products

27. Khadi products and hosiery products

28. Handicraft activities like spinning, weaving, and artisans

29. Printing and other products made of paper

30. Coir industry

31. Furniture and wood products

32. Poultry farm

33. Bicycle parts

34. Stationery items

35. Call centre

36. Rubber products

37. IT solutions like creating a server bank, application service

provider, smart card customization, etc.

38. Testing labs for industries

39. Auto businesses such as auto parts components like horn

buttons, door channels, wiper blade components, and battery cell
testers

40. Ceramics and glass products include roofing tiles, glass flooring
tiles, granite, etc.

41. Retail and wholesale business

Businesses that do not fall under MSME?

 Gambling and betting activities

 Forestry and logging

 Fishing and aquaculture

 Trade/repair of motorcycles (wholesale and retail)

 Retail trade except of vehicles and motorcycles

 Activities of households for domestic personnel

 Activities of extraterritorial organizations and bodies

 Goods and services produced via private households for personal use

NOTE:

o Home cooking for family,

o Tailoring for personal or household use,

o Handicrafts made for gifting or home decor (not for sale),

o Any product or service not intended for sale in the market or

not run as a business,

are not treated as commercial economic activities and hence do

not qualify as MSMEs.

❌ Excluded Under MSME:

These are classified as non-economic activities, because:

 They do not generate market-based income,

 They are not registered business entities,

 They are not meant for sale or commercial use.

✅ However, if a private household sells products or services

(e.g. homemade pickles, soaps, tailoring services to outsiders),
it can be:

 Considered a home-based business,

 Eligible for MSME registration, provided it meets the investment and

turnover criteria.

🔹 MSME Eligibility Criteria (As per latest Udyam norms):

Enterprise Type Investment in Plant & Machinery/Equipment

Annual Turnover

Micro ≤ ₹1 crore ≤ ₹5 crore

Small ≤ ₹10 crore ≤ ₹50 crore

Medium ≤ ₹50 crore ≤ ₹250

crore
 💡 Both manufacturing and service enterprises are eligible under these
thresholds.

Top 5 popular industries that fall under MSMEs

 Food products

 Textile

 Apparel

 Fabricated metal products

 Machinery & equipment

🏛 Government Support & Reforms

Policy Reforms & Regulatory Measures

1. Udyam Registration Portal

o Online, paperless, and based on self-declaration using Aadhaar

and PAN.

o Integrated with Income Tax and GST databases.

o Enables easy access to government benefits.

💰 Financial Assistance & Credit Support

1. Emergency Credit Line Guarantee Scheme (ECLGS)

o Offered ₹3 lakh crore collateral-free loans during COVID-19.

o Extended to support stressed MSMEs and maintain liquidity.

2. Credit Guarantee Fund Trust for Micro and Small Enterprises

(CGTMSE)

o Provides credit guarantees for loans up to ₹5 crore.

o Encourages banks/NBFCs to lend without collateral.

3. Interest Subvention Scheme

o 2% interest relief on loans for MSMEs registered under GST.

o Promotes timely repayment and lowers cost of credit.

4. MUDRA Scheme (via Pradhan Mantri MUDRA Yojana – PMMY)

 o Offers funding under three categories:

 Shishu: up to ₹50,000

 Kishore: ₹50,000–₹5 lakh

 Tarun: ₹5 lakh–₹10 lakh

🧾 Ease of Doing Business Initiatives

1. Champion Portal

o Grievance redressal, self-promotion, and support system for

MSMEs.

o Real-time resolution of issues faced by businesses.

2. TReDS (Trade Receivables Discounting System)

o Digital platform for MSMEs to finance trade receivables.

o Allows early payment from corporate buyers at competitive

rates.

3. One Nation One Tax – GST Implementation

o Simplified tax regime reducing cascading of taxes.

o Boosts interstate trade and formalisation.

🌍 Export Promotion & Market Support

1. Zero Effect Zero Defect (ZED) Certification

o Encourages quality manufacturing and green practices.

o Enhances global competitiveness.

2. MSME Export Promotion Council (MEPC)

o Supports MSMEs in exploring global markets through exhibitions

and buyer-seller meets.

3. Participation in Government E-Marketplace (GeM)

o Encourages MSMEs to supply goods/services directly to

government departments.
 📚 Skill Development & Digital Adoption

1. Technology Centres & Incubation Support

o 18+ Technology Centres set up across India for training and R&D.

o Incubation centres for promoting innovation and

entrepreneurship.

2. Digital MSME Scheme

o Promotes digital tools like cloud computing and ERP.

o Offers financial incentives to adopt digital solutions.

👩‍💼 Special Focus: Women & SC/ST Entrepreneurs

1. Stand-Up India Scheme

o Loans from ₹10 lakh to ₹1 crore for women, SC/ST entrepreneurs.

2. Support for Women Entrepreneurs

o Priority lending, skill training, and incentives through banks and

government schemes.

o Special MSME schemes tailored for women-owned businesses.

✅ Impact

 Enhanced formalisation of the MSME sector.

 Improved access to finance and markets.

 Boosted confidence in self-employment and entrepreneurship.

 Classification was revised in June 2020 (Atmanirbhar Bharat),

adopting a composite model that unifies the investment/turnover
methodology and includes traders.
  Udyam Registration Portal enables online registration, giving
access to government schemes, subsidies, and priority sector lending
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 A 2025 update refined thresholds further:

The New MSME Classification (2025 Update)

As per the latest classification (effective July 1, 2020, and further refined in
2025), MSMEs are categorized based on both investment in
plant/machinery/equipment and annual turnover:

New Classificatio
Investment Limit Turnover Limit
n

Up to ₹2.5 crore Up to ₹10 crore

Micro (earlier Up to ₹1 (earlier Up to ₹5
crore) crore)

Up to ₹25 crore Up to ₹100 crore

Small (earlier Up to ₹10 (earlier Up to ₹50
crore) crore)

Up to ₹125 crore Up to ₹500 crore

Medium (earlier Up to ₹50 (earlier Up to ₹250
crore) crore)

Earlier there was a distinction between goods and services. The new
classification ensures uniformity across both manufacturing and service
sectors.

Here are the key benefits for women entrepreneurs who register their
businesses as an MSME (Micro, Small, and Medium Enterprise) in India:

🌟 1. Access to Government Schemes for Women

 TREAD Scheme (Trade Related Entrepreneurship Assistance and

Development): Offers credit, training, and counseling for women
entrepreneurs.
  Udyam Sakhi Portal: Dedicated support platform for women to start,
grow, and manage businesses.

 Mahila Coir Yojana: Encourages women’s participation in the coir

industry with subsidized equipment and training.

💰 2. Easier Access to Credit

 Priority sector lending: Banks prioritize loans to registered women-

led MSMEs.

 Low-interest loans: Women often receive concessional interest rates.

 Credit Guarantee Scheme: Offers collateral-free loans.

 Stand Up India Scheme: Provides loans from ₹10 lakh to ₹1 crore

specifically for women and SC/ST entrepreneurs.

🧾 3. Subsidies and Financial Incentives

 Subsidy for patent/design registration

 Reimbursement of ISO certification expenses

 Concession on electricity bills

 Interest subsidy on bank loans under Credit Linked Capital

Subsidy Scheme (CLCSS)

📈 4. Market Access and Promotion

 Marketing support and exhibition reimbursements

 Preference in government tenders (public procurement)

 50% subsidy for barcoding registration

 Assistance in trade fairs and international exhibitions

📚 5. Skill Development and Training

 Specialized entrepreneurship development programs (EDPs)

  Government-sponsored workshops on digital tools, marketing,
compliance, and business strategy tailored for women

🛡 6. Legal and Compliance Benefits

 Easier registration and compliance via Udyam portal

 Protection from delayed payments under MSMED Act

 Exemption from certain direct tax laws (for initial years of

operation)

🏢 7. Infrastructure Support

 Priority in allocation of plots and sheds in industrial estates or parks

 Cluster development support for businesses run by women

collectives

✅ In Summary

Registering as an MSME helps women entrepreneurs formalize their

businesses, gain financial, legal, and capacity-building support, and
tap into targeted government schemes aimed at leveling the playing field
and promoting inclusive growth.