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282 Economic Survey 2021-22

Micro Small Medium Enterprise

8.24 Micro, Small & Medium Enterprises (MSMEs) contribute significantly to the economic and
social development of the country by fostering entrepreneurship and by generating employment
opportunities. The relative importance of MSMEs can be gauged from the fact that the share of
MSME GVA in total GVA (current prices) for 2019-20 was 33.08 per cent.

8.25 The The government has taken several initiatives to nurture and promote the MSMEs. The
revision in the definition of MSMEs brought in w.e.f. 1st July, 2020 as part of the AtmaNirbhar
Bharat package introduced a composite-criteria of investment and annual turnover- and identical
limits for manufacturing and services sector (Table 5). The modified definition of MSMEs
will facilitate expansion and growth of these enterprises. The resulting economies of scale can
enhance productivity without the MSMEs losing out on several government incentives including
market support, export promotion, preferential procurement in the public sector and incentives
through the Micro Small Enterprises- Cluster Development Programme (MSE-CDP), Prime
Minister Employment Generation Programme (PMEGP) and Scheme of Fund for Regeneration
of Traditional Industries (SFURTI) and enabling of IT ecosystems. This enabling environment
will promote competition and avoid dwarfism among MSMEs. The recent measures taken by
the Government to improve the ease of doing business for the MSMEs include the launch of the
new Udyam Registration Portal in July 2020. The registration process under this is fully online,
digital, paperless and is based on self-declaration. No documents or proof are required to be
uploaded for registering as a micro, small and medium enterprise. Aadhaar and PAN are required
for registration and details on investment and turnover of enterprises are taken automatically from
relevant Government databases. New registration process has boosted the ease of doing business
for MSMEs by reducing transaction time and costs. As on 17.01.2022, 66,34,006 enterprises have
registered on the Udyam portal, out of which 62,79,858 are micro; 3,19,793 are small; and 34,355
are medium enterprises. Further, among the new measures, the retail and wholesale trades were
included as MSMEs and they are allowed to be registered on Udyam Registration Portal. However,
the benefits to retail and wholesale trade MSMEs are to be restricted to Priority Sector Lending
only. In this regard, now, street vendors can also register as retail traders on Udyam Registration
(UR) portal and avail the benefit of priority sector lending.

Table 5: Definition of MSMEs - Old and New

Old Definition New Definition

Manufacturing Services Manufacturing Services

Investment in Investment in Plant and Machinery or Equip-
Plant and Ma- Investment in mentand turnover:
Micro chinery: Does not Equipment: Does The investment in plant and machinery or
not exceed Rs. 10
exceed Rs. 25 Lakh. equipment does not exceed Rs. 1 Crore and
Lakh. turnover does not exceed Rs. 5 crores.
Investment in Investment in Investment in Plant and Machinery or Equip-
Plant and Machin- Equipment: More ment and turnover :The investment in plant
ery: More than
Small than Rs. 10 Lakh and machinery or equipment does not exceed
Rs. 25 lakh but
does not exceed but does not ex- Rs. 10 crore and turnover does not exceed Rs.
ceed Rs. 2 crore
50 crore.
Rs. 5 crore