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With theenactment of MSMED Act 2006 and with the issuance of the Government Of India,Ministry Of Commerce & Industry, Department Of Industry Policy &Promotion Notification No. S.O. 563(E) dated 27.02.2009, the paradigm shiftthat has taken place in the supportive measure extended by GOI to Small Scaleor an Ancillary Industrial Undertaking is the inclusion of the servicessector in the definition of Micro Small & Medium Enterprises, apart fromextending the scope to medium enterprises.

The MSMED Act2006 has modified the definition of Micro Small & Medium enterprisesengaged in manufacturing or production and providing or rendering ofservices. This definition has been adopted for the purpose of extending BankCredit vide RBI circular no. RPCD.PLNFS.BC.No. 63/06.02.31/2006-07 dated04-04-2007.

As per MSMEDAct 2006 the MSME segment has broadly been classified into ManufacturingEnterprises & Service Enterprises.

AManufacturing Sector Enterprise is one, which is engaged in the manufacturingor production, processing or preservation of goods. Investment in plant &machinery (Original Cost excluding Land & Building and the itemsspecified by the Ministry Of Small Scale Industries vide its notification No.S.O. 1722(E) dated 5.10.2006) is the criterion for classifying amanufacturing enterprise into Micro, Small and Medium Manufacturing SectorEnterprise.

A ServiceSector Enterprise is one, which is engaged in providing or rendering ofservices. Investment in equipments (Original Cost excluding Land &Building and furniture, fittings and other items not directly related to theservice rendered or as may be notified under the MSMED ACT 2006) is thecriterion for classifying a service enterprise into Micro, Small and MediumService Sector Enterprise.

The followingtable reflects the investment ceilings for classifying Micro, Small andMedium Sector Enterprises :


ManufacturingSector(Investment in P & M)

ServiceSector(Investment in Equipments)

Micro Enterprise

Upto Rs 25.00 Lacs

Upto Rs 10.00 Lacs

Small Enterprise

More than Rs 25.00 Lacs upto Rs 5.00 Crores.

More than Rs 10.00 Lacs upto Rs 2.00 Crores

Medium Enterprise

More than Rs 5.00 Crores upto Rs 10.00 Crores

More than Rs 2.00 Crores upto Rs 5.00 Crores