Micro, Small and Medium Enterprises (MSMEs) are the backbone of economy. Recognizing this fact, Government of India offers many benefits to those companies registered as MSME under MSMED Act. Although it is not mandatory, registration as MSME opens the gateway to numerous benefits such as tax exemptions, capital investment subsidies, power tariff subsidies etc. Manufacturing units with an investment of less than INR 10 crores in plant and machinery and service enterprises with an investment of less than INR 5 crores in plant and machinery qualify for registration as MSMEs. If and when this limit is exceeded, the registration as MSME will have to be cancelled. The cost of land and building is not included while calculating investment in infrastructure.
MSMEs are further classified as Micro, Small and Medium Enterprises. Micro enterprises have an investment of less than 25 Lakhs for manufacturing units and 10 Lakhs for service enterprises. Small manufacturing enterprises have investments between 25 Lakh and 5 crores, while small service enterprises have them between 10 Lakhs and 2 crores. Medium manufacturing units can invest between 5 and 10 crores and medium service enterprises between 2 and 5 crores. All these figures are applicable only to plant and machinery investments. Although you can apply for this registration at any time during your company is eligible.