Budget 2025: Revised MSME Classification Criteria to Boost Growth and Employment.

New MSME Classification Criteria 2025 : In a significant move to support the growth of Micro, Small, and Medium Enterprises (MSMEs) Finance Minister Nirmala Sitharaman announced revised classification criteria during the Union Budget 2025 presentation. The new criteria aim to bring more enterprises under the MSME umbrella enabling them to achieve higher efficiencies of scale, technological upgradation, and better access to capital.

Key Highlights of the Revised MSME Classification Criteria:

1. Investment Limits (Increased 2.5 Times):
   • Micro Enterprises: Rs 2.5 crore (from Rs 1 crore).
   • Small Enterprises: Rs 25 crore (from Rs 10 crore).
   • Medium Enterprises: Rs 125 crore (from Rs 50 crore).
2. Turnover Limits (Doubled):
   • Micro Enterprises: Rs 10 crore (from Rs 5 crore).
   • Small Enterprises: Rs 100 crore (from Rs 50 crore).
   • Medium Enterprises: Rs 500 crore (from Rs 250 crore).

Rationale Behind the Revision:

The revised criteria are designed to:
✅ Encourage MSMEs to grow without losing their eligibility for government benefits.
✅ Facilitate technological upgradation and access to capital.
✅ Boost employment generation and economic growth.

Impact on MSMEs:

• The new classification will allow more enterprises to qualify as MSMEs, enabling them to avail benefits such as subsidies, loans, and tax incentives.
• It will provide MSMEs with the confidence to scale up their operations and compete globally.

MSMEs: A Pillar of India’s Economy:

• Currently, over 1 crore registered MSMEs employ 7.5 crore people and contribute 36% of India’s manufacturing output.
• MSMEs are responsible for 45% of India’s exports, showcasing their critical role in positioning India as a global manufacturing hub.

Statement from the Finance Minister:

Nirmala Sitharaman stated, “To help MSMEs achieve higher efficiencies of scale, technological upgradation, and better access to capital, the investment and turnover limits for classification of all MSMEs will be enhanced to 2.5 and 2 times respectively. This will give them the confidence to grow and generate employment for our youth.”

Previous Revision:

The last revision in the MSME definition was made in 2020 post-COVID-19, to provide relief and support to small businesses. The new criteria reflect the government’s continued focus on strengthening the MSME sector, which is a key driver of India’s economic growth

FAQ : Revised MSME Classification Criteria