The new criteria for classification and registration of Micro, Small and Medium enterprises

Micro, small and medium enterprises (MSMEs) have a significant role to play in the growth of the economy and the future of our country. The MSME industry, which has been a key industry for a very long time, has been contributing immensely and there’s enough proof to substantiate this fact. As per recent statistics, MSMEs in India contributed to nearly 8% of the country’s GDP, around 45% of the manufacturing output, and approximately 40% of the country’s exports. And this is only a fragment of the entire contribution made by the industry which makes it pivotal for the Government of India and other private and public entities to support MSMEs in every way.

While those in the business are aware of the definition of an MSME and further aware of the benefits one can avail if registered as an MSME/SSI under MSME Act, it has been close to 14 years since that definition has changed. Ever since, business owners have been living in the fear of losing the title of an MSME and the myriad benefits that come with it, subject to growth of their existing business.

The need of the hour

In a crucial time like this when business owners were looking for a reform in the way an MSME is projected and avail more benefits, the AATMANIRBHAR BHARAT PACKAGE which was announced in the recent past, has been a welcome change. The Government, in the Ministry of Micro, Small and Medium Enterprises had issued a notification to bring a change in the MSME definition, in accordance with the Aatmanirbhar Bharat Package.

The new definition and criterion that have been notified and came into effect during the second half of the last year, is as follows:

The new definition

Guidelines for classification of MSMEs.

The definition of Micro manufacturing and services units was increased to Rs. 1 Crore of investment and Rs. 5 Crore of turnover. The limit of small unit was increased to Rs. 10 Crore of investment and Rs 50 Crore of turnover. Similarly, the limit of medium unit was increased to Rs. 50 Crore of investment and Rs. 250 Crore of turnover.

Revised MSME Classification

Revised MSME Classification
Sr. No. Enterprises  Investment in and Turnover  Limit 
(i) A Micro Enterprises  Investment in plant and machinery or equipment; AND does not exceed one crore rupees

(<Rs. 1 crore)

Turnover does not exceed five crore rupees

(<Rs. 5 crore)

(ii) A Small Enterprise Investment in plant and machinery or equipment; AND does not exceed ten crore rupees

(<Rs. 10 crore)

Turnover does not exceed fifty crore rupees

(<Rs. 50 crore)

(iii) a Medium Enterprise Investment in plant and machinery or equipment; AND does not exceed fifty crore rupees

(<Rs. 50 crore)

Turnover does not exceed two hundred and fifty crore rupees

(<Rs. 250 crore)

Guidelines for registration.

In the context of registration for MSMEs, as per the said notification, an MSME will now be known as ‘Udyam’, and the registration process will be known as ‘Udyam Registration’.

Any person who intends to establish a micro, small or medium enterprise may file Udyam Registration online and upon registration, an enterprise will be assigned a permanent identity number to be known as “Udyam Registration Number”. Thereafter, an e-certificate, namely, “Udyam Registration Certificate” shall be issued on completion of the registration process.

New registration process

1. The requisite form shall be provided in the Udyam Registration Portal, for which there will be no fee.

2. It is necessary for a person to have Aadhaar Number for Udaym Registration. The Aadhaar number shall be of the proprietor in the case of a proprietorship firm and of the managing partner in the case of a partnership firm and of a Karta in the case of a Hindu Undivided Family (HUF).

3. In case of a Company or a Limited Liability Partnership or a Cooperative Society or a Society or a Trust, the organisation or its authorised signatory shall provide its GSTIN and PAN along with its Aadhaar number.

4. It is to be noted that no enterprise shall file more than one Udyam Registration. Any number of activities including manufacturing or service or both may be specified or
added in one Udyam Registration.

Registration of Existing Enterprises

1. All existing registered under EM-Part-II or UAM shall register again on the Udyam Registration portal on or after 1st July, 2020.

2. All enterprises registered till 30th June 2020, shall be re-classified in accordance with this notification.

3. The existing enterprises registered prior to 30th June 2020 shall continue to be valid only for a period upto the 31st March 2021.

4. An enterprise registered with any other organization under the Ministry of Micro, Small and Medium Enterprises shall register itself under Udyam Registration.

The announcement of the new classification and registration of MSMEs by the Government of India is a step into the right direction toward growth and development. The new guidelines and benefits will ensure MSMEs are equipped and this will catapult their performance and profits. Initiatives like these is what we need to ensure growth as individual businesses, as a sector and as an economy. It’s time to #Growkaro with such initiatives including the Walmart Vriddhi Training Program, a FREE online training program for MSMEs in association with two of the leading e-commence giants at a global level – Flipkart and Walmart, that helps MSMEs go digital and grow exponentially.


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