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MSMEs to be classified by turnover norms too

The investment limit of micro enterprises at Rs 25 lakh has been hiked to Rs one crore. It brought in a new turnover limit of Rs 5 crore for micro enterprises

twitter-logoJoe C Mathew | May 13, 2020 | Updated 19:20 IST
MSMEs to be classified by turnover norms too
The plan of the BJP government in 2018 was to free investments and define MSMEs only by turnover

The BJP government has finally shrugged off pressure from some constituents of its ideological parent - the Rashtriya Swayamsevak Sangh (RSS) -to amend the turnover and investment criteria of micro, small and medium enterprises (MSMEs).

The first tranche of the current COVID-19 package announced by finance minister Nirmala Sitharaman today brought in the changed definition. The investment limit of micro enterprises at Rs 25 lakh has been hiked to Rs one crore. It brought in a new turnover limit of Rs 5 crore for micro enterprises. Similarly, a small scale unit where investment was Rs 5 crore has been increased to up to Rs 10 crore with a turnover limit of Rs 50 crore. For medium scale enterprises, the original investment limit of up to Rs 10 crore has been doubled to Rs 20 crore with a turnover of up to Rs 100 crore.

The plan of the BJP government in 2018 was to free investments and define MSMEs only by turnover. The most vociferous critic was RSS affiliate Laghu Bharati Udyog which said by defining MSMEs by turnover alone, government would be harming interests of small and micro players as they will not be able to bring in high investments. The government decision to have both turnover and investment limit may partially address concerns. The COVID-19 emergency has just helped government push through the reform.

The much awaited decision is expected to increase the level of competency of MSMEs.

Also read: What is the new definition of MSMEs?

Also read: Stimulus package: FM announces Rs 20,000 crore sub-ordinate debts scheme; to benefit over 2 lakh businesses

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