MSME: Loan for MSME in 59 Minutes

MSME: Loan for MSME in 59 Minutes

Background information

  • MSME accounts for more than 45% of total manufacturing output of the country, contributes around 9% to GDP and accounts for more than 40% of total exports of the country.
  • There are total around more than 40 million such enterprises in India (which is 2nd largest after China) it employs over 11 Crore people in India.

Classifications of MSME

  • Definitions of Micro, Small Medium Enterprises In accordance with the provision of Micro, Small Medium Enterprises Development (MSMED) Act, 2006 the Micro, Small and Medium Enterprises (MSME) are classified in two Classes:
  • Manufacturing Enterprises-he 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) or employing plant and machinery in the process of value addition to the final product having a distinct name or character or use. The Manufacturing Enterprise is defined in terms of investment in Plant Machinery.
  • Service Enterprises: -The enterprises engaged in providing or rendering of services and are defined in terms of investment in equipment.
  • The limit for investment in plant and machinery / equipment for manufacturing / service enterprises
A. Manufacturing Enterprises
  • Micro Enterprises: Less than 25 Lakh rupees.
  • Small Enterprises: More than 25 Lakh rupees but less than 5 Crore rupees.
  • Medium Enterprises: More than 5 Crore rupees but less than 10 Crore rupees.
B. Service Enterprises
  • Micro Enterprises: Less than 10 Lakh rupees.
  • Small Enterprises: More than 10 Lakh rupees but less than 2 Crore rupees.
  • Medium Enterprises: More than 2 Crore rupees but less than 5 Crore rupees.

NEW DEFINITION FOR MSMEs

  • The government has given a new turnover-based classification of MSMEs in February 2018.
  • As per this new classification, the MSMEs are categorized in term of business turnover. This is in place of the previous classification based on investment made in plant and machineries if they are operating in the manufacturing sector and investment in equipment for service sector companies.
  • As per the new classification, the same turnover based criteria have been applied for all type of MSMEs including those operating in the services sector.
  • Though the primary responsibility of promotion and development of MSMEs is of the State Governments, the Centre has passed an Act in 2006 to empower the sector and also has formed a ministry (Ministry of MSMEs). It was the Micro, Small and Medium Enterprises Development (MSMED) Act which was notified in 2006 that defined the three tiers of micro, small and medium enterprises and set investment limits. The new turnover criteria will better suit with the GST Network (GSTN) and other formats of segregating the MSMEs.

Location: Thiruvananthapuram, Kerala, India

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