MSME Definition

WHAT IS MICRO, SMALL AND MEDIUM ENTERPRISES?
As per the Government of India, the term MSME (Micro, Small and Medium Enterprises) is defined under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, with the classification revised with effect from 1 April 2025.
Official Government of India definition
An enterprise is classified as a Micro, Small or Medium Enterprise based on both investment in plant & machinery/equipment and annual turnover:
Category
Investment in Plant & Machinery / Equipment
Annual Turnover
Micro Enterprise
Not more than ₹2.5 crore
Not more than ₹10 crore
Small Enterprise
Not more than ₹25 crore
Not more than ₹100 crore
Medium Enterprise
Not more than ₹125 crore
Not more than ₹500 crore


Important: The classification is based on the composite criteria of investment and turnover. An enterprise must satisfy the applicable limits for both criteria.
What does "enterprise" mean?
Under the MSMED Act, an enterprise means an industrial undertaking or a business concern, or any other establishment engaged in:
the manufacture or production of goods pertaining to any industry; or
the provision or rendering of services.
The current MSME classification applies to both manufacturing and service enterprises.

Government's current classification framework
A useful formal way to state it in a government report would be:
“Micro, Small and Medium Enterprises (MSMEs) are enterprises classified in accordance with the composite criteria of investment in plant and machinery or equipment and annual turnover, as notified by the Government of India under the Micro, Small and Medium Enterprises Development Act, 2006, as amended from time to time.”