What is MSME?

Defining MSMEs

Micro, Small and Medium Enterprises (MSMEs) are classified under the revised Udyam definition, which uses a composite criterion of investment in plant & machinery and annual turnover, applied uniformly to manufacturing and services.

The classification thresholds

Micro: investment up to ₹1 crore and turnover up to ₹5 crore. Small: investment up to ₹10 crore and turnover up to ₹50 crore. Medium: investment up to ₹50 crore and turnover up to ₹250 crore. (These thresholds are periodically revised upward.) An enterprise is classified by whichever criterion places it in the higher category.

Why classification matters

The category determines eligibility for schemes, subsidies, priority-sector lending and the protections under the MSMED Act. As an enterprise grows past a threshold, its classification updates, which can change benefit eligibility.

Composite criteria, one registration

The beauty of the Udyam regime is a single, online, self-declaration-based registration linked to PAN and GST that auto-computes turnover and investment from government databases — replacing the older, paperwork-heavy Udyog Aadhaar system.