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The Ministry of Small Scale Industries had, vide a notification dated 29th September 2006, classified micro, small and medium enterprises as follows:
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Criteria : Investment in Plant and Machinery or Equipment
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Classification
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Micro
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Small
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Medium
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Mfg.
Enterprises
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Investment < Rs.25 lac
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Investment < Rs 5 Cr.
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Investment < Rs.10 Cr.
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Service
Enterprises
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Investment < Rs.10 lac
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Investment < Rs.2 Cr.
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Investment < Rs.5 Cr.
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By a notification dated 1st June 2020, the Ministry of Micro, Small and Medium Enterprises (“Notification”) has suppressed the abovementioned notification of 29th September, 2006 and amended the classification of micro, small and medium enterprises as follows:
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Composite Criteria: Investment And Annual Turnover
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Classification
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Micro
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Small
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Medium
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Manufacturing
& Services
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Investment < Rs.1 Cr.
and
Turnover < Rs.5 Cr.
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Investment < Rs10 Cr.
and
Turnover < Rs50 Cr.
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Investment < Rs.50 Cr.
and
Turnover < Rs.250 Cr.
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The Notification is to come into effect from 1st July 2020.
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The Notification has been published pursuant to the economic reliefs announced by Finance Minister Mrs. Nirmala Sitharaman on 13th May 2020. In our view, the amended classification of micro, small and medium enterprises (“MSMEs”), ought to extend the reliefs announced by the Finance Minister to a larger number of enterprises. As the threshold for the definitions of MSMEs has been raised, the number of enterprises that fall within this umbrella will increase substantially. As such, the economic stimulus proposed to be offered to MSMEs by the government will now be available to a greater pool of enterprises, which will in turn aid industries suffering from massive losses to return to business.
For a copy of the notification, click here.
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