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Consolidated notification on MSME classification and registration

Topics Covered: Inclusive growth and issues arising from it.

Consolidated notification on MSME classification and registration

The Micro Small and Medium Enterprises (MSME) Ministry has issued consolidated notification for classification and registration of MSMEs to be effected from July 1.

This notification would supercede all earlier notifications with regard to classification or registration of MSMEs.

As per the latest notification:

  1. An MSME would hereafter been referred to as Udyam and the registration process as Udyam Registration.
  2. The Registration can be filed online based on self-declaration. Uploading of documents, papers or certificate as proof would not be necessary henceforth.
  3. The basic criteria for MSME classification would be on investment in plant, machinery and equipment and turnover.
  4. Export of goods or services or both would be excluded while calculating the turnover of any enterprise and investment calculation linked to the IT return of the previous year.
  5. Champions Control Room across the country have been made legally responsible for facilitating entrepreneurs in registration and thereafter.

As per the latest classification:

  1. Micro enterprises would be those with investments not exceeding Rs one crore and turnover of Rs 5 crore.
  2. Small enterprises would be those with investment up to Rs 10 crore and turnover of up to Rs 50 crore.
  3. Medium enterprises – as those with investments not exceeding Rs 50 crore and turnover of Rs 250 crore.

Significance and implications of these measures:

The measures would completely change the way MSMEs work, ensure they compete globally besides resulting in newer enterprises entering the fray.

With the stimulus, these enterprises will be in a position to lead to a fast V-shaped recovery the moment the pandemic is brought under control.

Significance of MSMEs:

With around 63.4 million units throughout the geographical expanse of the country, MSMEs contribute around 6.11% of the manufacturing GDP and 24.63% of the GDP from service activities as well as 33.4% of India’s manufacturing output.

They have been able to provide employment to around 120 million persons and contribute around 45% of the overall exports from India.

About 20% of the MSMEs are based out of rural areas, which indicates the deployment of significant rural workforce in the MSME sector.

Additional fact:

International MSME Day was observed on 27 June under the theme “COVID-19: The Great Lockdown and its impact on Small Business.”


Prelims Link:

  1. Share of MSME sector in India’s GDP and exports.
  2. The basic criteria for MSME classification.
  3. What is referred to as Udyam according to Government of India?
  4. Classification of MSMEs.
  5. What is V- shaped recovery?
  6. SDGs on MSMEs.

Mains Link:

What is the potential of India’s MSME sector? Discuss the challenges and concerns associated with the growth of MSME sector in India.

Sources: pib.