Revision of MSME Classification Criteria: Enhanced Investment and Turnover Limits Effective April 1, 2025
In a significant policy update aimed at supporting the growth and scalability of small businesses, the Ministry of Micro, Small and Medium Enterprises (MSME) has revised the investment and turnover thresholds for MSME classification. The revised thresholds are intended to help businesses that were nearing the previous investment or turnover limits retain their MSME status, while also broadening the scope for more enterprises to fall under the MSME category and access government support and incentive schemes.
This move was formalized through Notification S.O. 1364(E) dated 21 March 2025, and came into effect from 1 April 2025. The new thresholds supersede the earlier criteria laid out under Notification S.O. 2119(E) dated 26 June 2020, issued under the Micro, Small and Medium Enterprises Development Act, 2006.
Revised Classification Criteria:
| Enterprise Category | Previous Investment Limit | Revised Investment Limit | Previous Turnover Limit | Revised Turnover Limit |
| Micro Enterprises | ₹1 crore | ₹2.5 crore | ₹5 crore | ₹10 crore |
| Small Enterprises | ₹10 crore | ₹25 crore | ₹50 crore | ₹100 crore |
| Medium Enterprises | ₹50 crore | ₹125 crore | ₹250 crore | ₹500 crore |
The enhancement of investment and turnover thresholds is a progressive and much-needed reform. It recognises that as businesses grow, their investment and turnover naturally increase. For instance, consider a small enterprise unit that initially qualified as an MSME in 2021 with an investment of ₹8 crore and a turnover of ₹40 crore. As it scaled operations by 2025, its investment rose to ₹15 crore and turnover to ₹70 crore breaching the previous limits of ₹10 crore and ₹50 crores. Under the old framework, it would have lost its MSME status and all associated benefits. However, with the revised thresholds in place, the enterprise can now retain its MSME classification and continue to avail benefits from MSME-related schemes and support as they scale up. These benefits include:
- Easier access to credit through priority sector lending
- Subsidies and incentives under various central and state government schemes
- Simplified compliance and regulatory relaxations
- Collateral-free loans
By expanding the eligibility net, the government aims to foster innovation, employment generation, and competitiveness within the MSME sector, which is a crucial pillar of the Indian economy. This move is likely to encourage more enterprises to register as MSMEs and actively participate in formal economic activities, thereby contributing to long-term economic resilience and inclusive growth.
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