Context:

• The Government of India has made significant amendments to the investment and annual turnover norms for the classification of Micro, Small, and Medium Enterprises (MSME), effective from April 1, 2025.

Objective:

• To bring more enterprises under the MSME category.
• Enable them to benefit from government schemes and incentives.
• Key Changes in MSME Classification:

Micro Enterprises:

• Investment Limit: Increased from ₹1 crore to ₹2.5 crore.
• Turnover Limit: Increased from ₹5 crore to ₹10 crore.

Small Enterprises:

• Investment Limit: Increased from ₹10 crore to ₹25 crore.
• Turnover Limit: Increased from ₹50 crore to ₹100 crore.

Medium Enterprises:

• Investment Limit: Increased from ₹50 crore to ₹125 crore.
• Turnover Limit: Increased from ₹250 crore to ₹500 crore.

Under these amendments:

• The investment limit has been increased by up to 2.5 times.
• The turnover limit has been doubled.
• This change aims to promote the growth and expansion of MSMEs.

Key Points:

Integrated Criteria:

• Previously, MSME classification was based only on investment.
• Now, both investment and annual turnover are considered, providing a more accurate assessment of enterprises.

Industry Expansion:

• With the revised criteria, more enterprises will qualify as MSMEs.
• They will become eligible for government schemes, subsidies, and tax benefits.

Transparency and Simplicity:

• The revised classification will enhance transparency.
• It will simplify the registration process for enterprises.

Impact on Government Schemes:

• The new classification will allow MSMEs to benefit from:
• Credit Guarantee Fund Scheme,
• Prime Minister's Employment Generation Programme (PMEGP), and
• Other financial assistance schemes.
• MSMEs will also benefit from the 25% reservation under the Public Procurement Policy.

Micro, Small, and Medium Enterprises (MSME) Sector:

• The Government of India classifies MSMEs based on their investment and turnover limits under the MSME Development Act, 2006.

Significance of the MSME Sector:

• The Union Budget 2025-26 introduced various measures to strengthen the MSME sector.
• It recognized MSMEs as one of the key engines of India's growth journey, contributing to:
• Agriculture,
• Investment, and
• Exports.
• MSMEs play a crucial role in manufacturing, exports, and employment.
• 5.93 crore registered MSMEs employ over 25 crore people, contributing significantly to India's economic output.
• In 2023-24, MSME-related products accounted for 45.73% of India's total exports, solidifying their role in establishing India as a global manufacturing hub.

Current Scenario of MSMEs in India:

• The MSME sector remains the backbone of India's economic growth, contributing significantly to employment, manufacturing, and exports.
• In recent years, the sector has shown remarkable resilience:
• Its share in Gross Value Added (GVA) increased from 27.3% in 2020-21 to 29.6% in 2021-22, and further to 30.1% in 2022-23, indicating its growing role in national economic output.

MSME exports witnessed substantial growth:

• From ₹3.95 lakh crore in 2020-21 to ₹12.39 lakh crore in 2024-25.

The number of exporting MSMEs surged:

• From 52,849 in 2020-21 to 1,73,350 in 2024-25.

Their share in India's total exports continues to rise:

• 43.59% in 2022-23,
• 45.73% in 2023-24, and
• 45.79% (by May 2024).
• These trends highlight the increasing integration of MSMEs into global trade and their role in enhancing India's position as a manufacturing and export hub.

Government Initiatives for MSMEs:

PM Vishwakarma:

• A flagship scheme launched by the Government of India to empower artisans and craftsmen.
• Announced in the 2023-24 budget and launched on September 17, 2023.
• Aims to enhance the social-economic status and quality of life of artisans.
• Fully funded by the Government of India with an initial outlay of ₹13,000 crore for 2023-24 to 2027-28.

Since its launch:

• Over 2.65 crore applications have been submitted.
• 27.13 lakh applications have been successfully registered.

Udyam Registration Portal:

• Launched on July 1, 2020, the Udyam Registration Portal serves as a key platform for enterprise registration across India.
• It encourages enterprises previously registered under Udyog Aadhaar Memorandum and Entrepreneurship Memorandum-II to migrate to this new system.
• The Government launched the Udyam Assist Platform on November 11, 2023, to formalize micro-enterprises.

Objective:

• To provide them access to Priority Sector Lending (PSL) benefits.

As of February 4, 2025:

• 5,93,38,604 MSMEs were registered on the Udyam portal.
• The majority are classified as micro-enterprises.
• These MSMEs generated employment for over 25.18 crore people, creating significant job opportunities.
• Prime Minister's Employment Generation Programme (PMEGP):
• A credit-linked subsidy scheme to promote employment by establishing micro-enterprises in the non-agricultural sector.

Under this scheme:

• Margin money (subsidy) is provided to beneficiaries availing loans from banks for setting up new ventures.

The maximum project cost is:

• ₹50 lakh for the manufacturing sector, and
• ₹20 lakh for the service sector.

Subsidy categories under PMEGP:

• Special categories (SC, ST, OBC, minorities, women, ex-servicemen, transgender, divyangjan, northeastern regions, aspirational districts, hilly and border areas):
• 25% subsidy in urban areas.
• 35% subsidy in rural areas.

General category applicants:

• 15% subsidy in urban areas.
• 25% subsidy in rural areas.

In 2023-24:

• 89,118 enterprises were assisted under PMEGP.
• ₹3,093.87 crore in margin money subsidy was disbursed.
• It created an estimated 7,12,944 employment opportunities.

Scheme of Fund for Regeneration of Traditional Industries (SFURTI):

• Launched in 2005-06, SFURTI aims to:
• Organize traditional artisans into clusters.
• Facilitate product development, diversification, and value addition.

Achievements:

• Since 2014-15, SFURTI approved the formation of 513 clusters.
• 376 clusters are successfully operational.
• ₹1,336 crore in grants has been provided.
• 2,20,800 artisans have been provided with sustainable employment opportunities (as of December 12, 2024).

Public Procurement Policy for Micro and Small Enterprises:

• The Ministry of MSME, Government of India notified the Public Procurement Policy for Micro and Small Enterprises (MSEs) in 2012.
• As per this policy, 25% of the annual procurement by Central Ministries, Departments and Central Public Sector Enterprises (CPSEs) should be procured from MSEs.
• Out of this 25%, 4% is reserved for Scheduled Caste/Scheduled Tribe (SC/ST)-owned MSEs, and 3% is reserved for MSEs owned by women entrepreneurs. Additionally, 358 items are reserved exclusively for procurement from MSEs.

Achievements:

• In 2023-24, Central Ministries, Departments and CPSEs procured goods and services worth a total of ₹74,717 crore from MSEs, which is 43.71% of their total procurement.
• This policy benefited 2,58,413 MSEs, ensuring them access to vital business opportunities and support through government procurement.