Updated MSME Classification Criteria Effective April 2025
The Ministry of Micro, Small, and Medium Enterprises (MSME) issued Notification S.O. 1364(E) on March 21, 2025, revising the MSME Classification criteria under the Micro, Small and Medium Enterprises Development Act, 2006. The updated MSME Classification, effective from April 1, 2025, supersedes the earlier thresholds set by Notification S.O. 2119(E) dated June 26, 2020, and aims to provide a more inclusive framework for enterprise categorization based on investment and turnover.
Revised Classification Criteria:
| Category | Investment Limit (INR) | Turnover Limit (INR) |
| Micro Enterprises | Up to 2.5 crore | Up to 10 crore |
| Small Enterprises | Up to 25 crore | Up to 100 crore |
| Medium Enterprises | Up to 125 crore | Up to 500 crore |
These updated thresholds represent a significant increase from the previous limits, aiming to accommodate inflation and evolving market conditions. The adjustments are intended to allow more enterprises to qualify as MSMEs, thereby enabling them to access various government benefits and support schemes.
Legal Clarifications:
- Composite Criteria: The classification continues to be based on a composite criterion of investment in plant and machinery or equipment and annual turnover. An enterprise will be classified in a particular category only if it meets both the investment and turnover limits specified for that category.
- Reclassification: Enterprises exceeding the specified limits for their current category in either investment or turnover will be reclassified into the next higher category. However, an enterprise will not be downgraded to a lower category unless it falls below the specified limits for both investment and turnover.
- Effective Date: The revised classification criteria come into effect from April 1, 2025. Enterprises are advised to assess their status based on the new thresholds to ensure compliance and to avail themselves of the benefits applicable to their category.
Implications for Enterprises:
The revision in classification criteria is expected to have several positive impacts:
- Broader Eligibility: More enterprises can now qualify as MSMEs, gaining access to benefits such as priority sector lending, subsidies, and various government schemes designed to promote growth and sustainability within the MSME sector.
- Encouragement for Growth: The increased limits provide room for enterprises to expand their operations without the immediate risk of losing MSME status, thereby encouraging scaling up and technological advancement.
- Regulatory Compliance: Enterprises should update their registrations and ensure compliance with the new criteria to continue availing themselves of MSME benefits.
In conclusion, the revised MSME classification criteria reflect the government’s commitment to fostering a conducive environment for the growth and development of micro, small, and medium enterprises in India.
