Micro, small and medium-sized enterprises (MSMEs) are small by categorisation but stand as the backbone of India’s economy. Besides generating employment for 28 crore people, the 6.5 crore MSMEs in India contribute 30.1% to GDP, 45.73% to exports and 35.4% to manufacturing. This is why MSMEs’ meaning signifies both the size of the business and its importance in India’s economic growth.
Understanding MSME classification is important for business owners, as well, as it helps avail both benefits and subsidies. In this blog, we will understand the MSME meaning, its benefits and classification.
MSME stands for Micro, Small, and Medium Enterprises. Under the MSME Development Act of 2006, MSMEs are businesses classified based on their annual turnovers. These businesses are usually involved in manufacturing, production, processing and preservation of goods and commodities.
MSMEs are important to economic growth as they generate employment and encourage innovation in industries including commerce, services, and manufacturing. This is why the government provides financing to MSMEs to support economic growth, financial inclusion and employment.
The government categorises micro, small, and medium enterprises on the basis of two parameters:
Here is how these businesses are classified based on their turnovers:
| Business Type | Turnover Threshold |
| Micro | Turnover not more than ₹10 crore Investment in plant, machinery or equipment not more than ₹2.5 crore |
| Small | Turnover not more than ₹100 crore Investment in plant, machinery or equipment not more than ₹25 crore |
| Medium | Turnover not more than ₹125 crore Investment in plant, machinery or equipment not more than ₹500 crore |
Examples of MSME
Here is why MSMEs are important for economic development:
Despite their importance, MSMEs face a number of challenges that restrict their operations and growth. Here are the key challenges that an MSME faces in India:
This is why the government of India offers support and business loans to MSMEs to bridge the credit gap, support inclusive development and encourage entrepreneurship. Here are all the government schemes that offer financing to MSMEs:
MSME Certificate is a document that identifies a business as a Micro, Small or Medium-sized Enterprise. It establishes that the business qualifies in terms of investment and turnover as stipulated in the MSME Development Act. The certificate provides businesses access to government schemes, financing, subsidies and other benefits.
Here are the steps you can follow to get an MSME certificate on the Udyam platform:
MSME plays an important role in propelling economic development and growth. As a business owner, getting an MSME certificate allows you to access government subsidies and business loans. It also allows your business to be legally recognised and opens doors to various finance and development benefits.
At DMI Finance, we are committed to bridging the credit gap for businesses. We achieve this by offering collateral-free business loans. Apply for a business loan of up to ₹25 lakh to steer your business towards growth and expansion.
1. Is Udyam registration mandatory for all MSMEs?
No, Udyam registration is not mandatory for all businesses, but registering helps you access business loans, subsidies, and government benefits.
2. Can an existing business apply for MSME registration?
Yes, both existing and new businesses can apply for Udyam Registration through the official portal, given that they meet the eligibility criteria.
3. Can a business update its MSME details after registration?
Yes, you can log in to the Udyam portal and update your investment, turnover, or business details.
4. Does an MSME certificate expire after a certain time?
No, the Udyam Registration Certificate has lifetime validity unless you cancel or close your business.
5. Can a business with multiple branches register under one MSME?
Yes, all branches or units of the same business can be covered under a single MSME registration.
6. Can a business outside manufacturing or services register as an MSME?
No, only businesses involved in manufacturing or service activities are eligible for MSME registration.
7. Is GST registration compulsory for MSME registration?
GST registration is not mandatory unless your business turnover crosses the GST threshold of a minimum of ₹40 lakh.
8. Can foreign-owned companies apply for MSME registration?
Only businesses registered in India and owned by Indian citizens or entities are eligible to apply for MSME registration.
9. How long does it take to get the MSME certificate?
Usually, the MSME certificate is generated immediately after successful online registration.
10. Can MSMEs apply for government tenders without prior experience?
Yes, MSMEs often get exemptions from prior experience or turnover requirements in government tenders.
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