Centre widens definition of MSMEs, raises investment limits

New Delhi, May 13 (IANS): In a major move to benefit several businesses in the country, the Centre has decided to review the definition of micro, small and medium enterprises (MSME) and announced increase of investment limits.

Addressing the media here, Finance Minister Nirmala Sitharaman said the additional criteria of turnover has also been introduced for recognition of an MSME.

Further, the government has also done away with the distinction of services and manufacturing MSME.

As per the new changes, businesses with investment of less than INR 1 crore and turnover of INR 5 crore would be classified as micro enterprises. Under the existing criteria, a company with investment of less than INR 25 lakh in the manufacturing sector and less than INR 10 lakh in the services sector were considered micro enterprises.

The investment limit of small enterprises has been increased to INR 10 crore, and the companies would have to have turnover of less than INR 50 crore.

Further, the investment limit for medium enterprises has been increased to INR 20 crore and the turnover limit has been kept at INR 100 crore.

Sitharaman said that the necessary amendments to laws will be brought about to give effect to the changes.

Among other measures for MSMEs, she also announced a collateral free automatic loans for businesses including MSMEs up to INR 3 lakh crore.

Under the measure, borrowers with up to INR 25 crore outstanding and INR 100 crore turnover would be eligible for the special collateral free loan.