Let us discuss about the new definition of MSME – turnover for the definition of MSMEs
MSMEs won't be characterized by investment anymore.
Union Minister Nitin Gadkari said in October 2019 that the revised definition of micro, small and medium-sized enterprises may grant a unified description of all tax, investment and more.
The changed description was to be implemented through an amendment that would further refine the Indian business scenario. Union Cabinet had approved the amendment to change the criteria for classifying MSMEs from "plant and machinery investment" to "annual turnover."
Finance Minister Nirmala Sitharaman added the additional turnover concept alongside the expenditure on 13 May 2020.
MSME definition – why the change
She also addressed the reasons behind it as Finance Minister Nirmala Sitharaman made the announcement about the change. She said the new definition would bring many benefits which would help MSMEs grow in size.
This was done under the Atma-nirbhar Bharat Abhiyaan Economic Package in order to alleviate the economic predicament of India amid the pandemic.
The cumulative value of the relief program amounts to a colossal Rs. 20 lakh Crore, in tandem with all other economic stimulation initiatives.
What is MSME? – An Introduction
MSME stands for Micro, Medium and Small Enterprises. The companies are categorized into two sections in compliance with the Macro, Small and Medium Enterprises Management (MSMED) Act of 2006.
- Manufacturing enterprises – Engaged in the production or manufacture of goods in any industry
- Service enterprises – Whether engaged in the provision or rendering of services
The old definition of investment-based MSME, MSMED Act, 2006
Headquarters is based in New Delhi, the ministry of micro, small and medium-sized enterprises in the country is a branch of the Indian government, which is the apex body for the formulation and administration of rules and laws.
Having built 11 Crore job opportunities in India while contributing 29 percent to GDP, we can say that the Indian economy is at the heart of MSMEs. And the improvement in the concept would enable Indian companies to perform better.