This is a basic introduction to the classification of businesses in India between SME and MSME

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Introduction to
SMEs & MSMEs

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Introduction
In accordance with the provision of Micro, Small & Medium Enterprises Development
(MSMED) Act, 2006 the Micro, Small and Medium Enterprises (MSME) are classified in two
Classes:
Manufacturing Enterprises
A) The enterprises engaged in the manufacture or production of goods pertaining to any
industry specified in the first schedule to the industries (Development and regulation) Act,
1951)
or
B) Employing plant and machinery in the process of value addition to the final product having
a distinct name or character or use. The Manufacturing Enterprise are defined in terms of
investment in Plant & Machinery.
Service Enterprises
The enterprises engaged in providing or rendering of services and are defined in terms of
investment in equipment..

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Classification – For Manufacturing Sector
Manufacturing Sector
Enterprises Investment in Plant & Machinery
Micro Enterprises Does not exceed INR 25 LAKHS
Small Enterprises More than twenty INR 25 LAKHS but does not exceed INR 5 Crores
Medium Enterprises More than INR 5 Crores but does not exceed INR 10 Crores

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Classification – For Service Sector
Service Sector
Enterprises Investment in equipments
Micro Enterprises Does not exceed INR 10 LAKHS
Small Enterprises More than INR 10 LAKHS but does not exceed INR 2 Crores
Medium Enterprises More than INR 2 Crores but does not exceed INR 5 Crores

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Current Facts - SMEs & MSMEs
Sector consist of 36 million units, as of today
Currently contributes about 8% to GDP & expected is to contribute 22% to GDP
Contributes to 45% of the total manufacturing output and 40% to the exports
from the country.
Provides employment to over 80 million persons
The Sector has more than 6,000 + products to serve

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