MSME - Micro, Small and Medium Enterprises

MSME stands for Micro, Small and Medium Enterprises, a category of businesses defined under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 and administered by the Ministry of MSME. An enterprise is classified using a composite criterion that looks at both its investment in plant and machinery or equipment and its annual turnover; the higher of the two categories applies. The classification thresholds were revised with effect from 1 April 2025, roughly doubling the investment limits and raising turnover limits to let firms grow without losing MSME status.

Classification criteria (from 1 April 2025)

Registration

Recognition is obtained through free online Udyam Registration at udyamregistration.gov.in, which is linked to the entity's PAN and the proprietor's or authorised signatory's Aadhaar. Udyam replaced the earlier Udyog Aadhaar Memorandum from 1 July 2020, and investment and turnover figures are auto-fetched from income-tax and GST records.

Key benefits

• Priority-sector lending and collateral-free credit under the CGTMSE scheme.
• Protection against delayed payments: buyers must pay within 45 days, failing which compound interest at three times the RBI bank rate applies under Section 16 of the MSMED Act, enforceable via the MSME Samadhaan portal.
• Preference in government tenders under the Public Procurement Policy, plus various subsidies and easier access to schemes.