The Indian Government’s change in the definition of Micro, Small and Medium Enterprises (MSME) has caused India to turn into a country of small businesses. 99% of Indian businesses now come under the category of MSMEs based on the parameters of investment and turnover. An entity can now be classified as a micro-enterprise if the investment is up to Rs 1 crore and turnover does not exceed Rs 5 crore. The corresponding figures are Rs 10 crore and Rs 50 crore for small and Rs 50 crore and Rs 250 crore for medium enterprises.
MSMEs were previously classified on investment into plant and machinery to give them access to concessional finance even though the main benefit of relief in excise duty has been null and void ever since GST has been implemented. Government sources state that GST authorities have received numbers that portray that 99% of Indian businesses reflect a turnover that fits into the new MSMEs definition. More than 50% of the entities listed with GSTN have a turnover of less than Rs 20 lakh. Export turnovers have been excluded so that maximum entities can benefit.
