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Definition of Micro, Small and Medium Scale Enterprises in India

The definitions are prescribed under the Micro, Small & Medium Enterprises Development (MSMED) Act, 2006.

Definition of "Enterprise" : [Section 2(e)]

Enterprise means an industrial undertaking or a business concern or any other establishment, by whatever name called, engaged in the manufacture or production of goods, in any manner, pertaining to any industry specified in the First Schedule to the Industries (Development and Regulation) Act, 1951 (65 of 1951) or engaged in providing or rendering of any service or services.


Classification of Enterprises : [Section 7]
(check gazette notification s.o. 1642(E) dated 29th Sep 2006 published by Ministry of Micro, Small & Medium Enterprises in the official gazette on 30th Sep 2006)

Any class or classes of enterprises, whether proprietorship, Hindu undivided family, association of persons, co-operative society, partnership firm, company or undertaking, by whatever name called, are classified into micro, small and medium enterprises as follows —

(a) in the case of the enterprises engaged in the manufacture or production of goods pertaining to any industry specified in the First Schedule to the Industries (Development and Regulation) Act, 1951 (65 of 1951), as—
  (i) a micro enterprise, where the investment in plant and machinery does not exceed twenty-five lakh rupees;
  (ii) a small enterprise, where the investment in plant and machinery is more than twenty-five lakh rupees but does not exceed five crore rupees; or
  (iii) a medium enterprise, where the investment in plant and machinery is more than five crore rupees but does not exceed ten crore rupees;

(b) in the case of the enterprises engaged in providing or rendering of services, as—
  (i) a micro enterprise, where the investment in equipment does not exceed ten lakh rupees;
  (ii) a small enterprise, where the investment in equipment is more than ten lakh rupees but does not exceed two crore rupees; or
  (iii) a medium enterprise, where the investment in equipment is more than two crore rupees but does not exceed five crore rupees.

Definition of Micro Small and Medium Enterprises in India


Also read: Cabinet approves proposal for Amendment to the Micro, Small and Medium Enterprises Development Act, 2006 to change the criteria of classification - click here

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