The definition of MSME has changed, new business rules will be implemented from April 1

If you’re thinking about launching a small business, it’s important to familiarize yourself with the updated regulations regarding MSMEs (Micro, Small, and Medium Enterprises). The government has revised the definition of MSMEs, and now the classification into micro, small, and medium categories will depend on both investment and turnover. These new guidelines will take effect on April 1, 2025.

The government revealed these changes during the budget announcement on February 1. With the new rules, MSMEs will be categorized differently, which is expected to support the growth of small industries. The investment and turnover thresholds for MSMEs have been raised, allowing businesses with higher figures to qualify as MSMEs.

Here’s what’s changed:

1. The investment and turnover limits for identifying MSMEs have been significantly increased. The investment cap has been raised to 2.5 times its previous amount, while the turnover limit has doubled. This adjustment will enable more MSMEs to benefit from government programs.

2. A company with an investment of up to Rs 2.5 crore will now be classified as a micro enterprise, up from the previous limit of Rs 1 crore.

3. Companies investing up to Rs 25 crore will be recognized as small enterprises, an increase from the earlier threshold of Rs 10 crore.

4. For medium enterprises, the investment limit has been set at Rs 125 crore, up from the previous Rs 50 crore.

Changes in turnover limits:

For micro enterprises, if the turnover is up to Rs 10 crore, it will be classified as a micro enterprise, an increase from the earlier limit of Rs 5 crore. The turnover cap for small enterprises has been raised from Rs 50 crore to Rs 100 crore. Medium enterprises now have a turnover limit of Rs 500 crore, up from Rs 250 crore.

Why was this change made?

During the budget presentation on February 1, Finance Minister Nirmala Sitharaman noted that there are currently over 1 crore registered MSMEs, which play a crucial role in providing employment.

What’s in it for us?

These changes will really help small and medium-sized enterprises (MSMEs). They can now grow their businesses without worrying too much. This move by the government will boost the MSME sector and drive the economy forward. Small business owners will have more chances to thrive and will be able to play a bigger role in the country’s development.