Q. Consider the following statements with reference to India :

1. According to the ‘Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, the ‘medium enterprises’ are those with investments in plant and machinery between `15 crore and `25 crore.
2. All bank loans to the Micro, Small and Medium Enterprises qualify under the priority sector.

Which of the statements given above is/are correct?

• 1 only
• 2 only
• Both 1 and 2
• Neither 1 nor 2

Answer: (b) 2 only

Notes

• Micro, Small, Medium Enterprises (MSMEs) are entities that are involved in the production, manufacturing and processing of goods and commodities.
• The concept of MSME was first introduced by the government of India through the Micro, Small & Medium Enterprises Development (MSMED) Act, 2006.
• MSME’s are classified as per their turnover and investment. After 14 years since the MSME Development Act came into existence in 2006, a revision in MSME definition was announced in the Atmnirbhar Bharat package on 13th May, 2020.
  • As per this announcement, the definition of Micro manufacturing and services units was increased to Rs. 1 Crore of investment and Rs. 5 Crore of turnover.
  • The limit of small unit was increased to Rs. 10 Crore of investment and Rs 50 Crore of turnover.
  • Similarly, the limit of medium unit was increased to Rs. 20 Crore of investment and Rs. 100 Crore of turnover. The Government of India on 01.06.2020 decided for further upward revision of the MSME Definition. For medium Enterprises, now it will be Rs. 50 Crore of investment and Rs. 250 Crore of turnover.