Page 657 - ES 2020-21_Volume-1-2 [28-01-21]

284 Economic Survey 2020-21 Volume 2

Micro, Small & Medium Enterprises (MSME)

8.30 The GoI has undertaken numerous initiatives to empower the MSMEs to tide over
the present crisis and become drivers of growth for the Indian economy. With more than 6
crores MSMEs, the sector has been the backbone of the economy and plays a crucial role in
employment generation and in contribution to GDP. The sector employs more than 11 crores
people, contributes roughly 30 per cent to the GDP, and contributes half of the country’s exports
helping in building a stronger and a self-reliant India.

8.31 The MSME sector was one of the worst hit sectors during the nation-wide lockdown.
Several corrective and supportive measures have been taken to bring the sector on track. The
first among those is the revision of the investment criteria in the MSME definition (Table 9 and
Box 4). The need for a change that provides small firms the incentives to grow and thereby
reap economies of scale was argued for in the Economic Survey 2018-19 Volume I (Chapter-3
Nourishing Dwarfs to become Giants: Reorienting policies for MSME Growth). This upward
revision in investment criteria is expected to make them globally competitive and facilitate
robust expansion of the MSMEs in the country. It will help in unleashing the economies of scale
in production without the fear of forgoing the benefits of an MSME unit. Some of the important
measures taken by the GoI as part of the Atmanirbhar Bharat package is highlighted in Box 1.
In addition, several other interventions have also been taken like the Champions Portal (Box
5) and launch of Udyam registration portal on July 1, 2020, which aims at reducing transaction
time and cost for entrepreneurs and promote ease of doing business.
Table 9: Definition of MSME Sector

Earlier MSME Classification

Criteria: Investment in Plant & Machinery or Equipment

Classification Micro Small Medium
Investment greater Investment greater
Investment less
Manufacturing than ` 25 lakhs & than ` 5 crores &
than ` 25 lakhs
less than ` 5 crores less than ` 10 crores
Investment greater Investment greater
Investment less
Service than ` 10 lakhs than ` 2 crores &
than ` 10 lakhs
less than ` 2 crores less than ` 5 crores
Revised MSME Classification

Composite Criteria: Investment And Annual Turnover
Classification Micro Small Medium

Investment greater than Investment greater than
Investment less than ` 1 crores & less than ` 10 crores & less than
Manufacturing & ` 1 crores and ` 10 crores and ` 20 crores and
Services Turnover less than Turnover greater than Turnover greater than
` 5 crores ` 5 crores & less than ` 50 crores & less than
` 50 crores ` 100 crores
Source: Ministry of MSME.