Which of the following statements regarding small scale industries in India is correct?
Show answer & explanation
Correct answer: C
Explanation
Correct Answer – They are classified based on capital investment in assets (along with annual turnover).
Explanation:
- • Basis of Classification: In India, Micro, Small, and Medium Enterprises (MSMEs) are classified based on the dual criteria of investment in plant and machinery (or equipment) and annual turnover.
- • Small Enterprise: According to the Central Government (effective from July 1, 2020), a Small Enterprise is defined on the following grounds:
- Investment: Investment in plant and machinery must not exceed ₹10 crore.
- Turnover: Annual turnover must not exceed ₹50 crore.
New Definition of MSME (Table):
Category — Investment — Turnover
• Micro — ≤ ₹1 crore — ≤ ₹5 crore
• Small — ≤ ₹10 crore — ≤ ₹50 crore
• Medium — ≤ ₹50 crore — ≤ ₹250 crore
Key Points:
- • Previously, classification was based solely on investment, and there were separate limits for the manufacturing and service sectors. Now, uniform criteria apply to both sectors.
- • Udyam Portal: The government has launched this self-declaration-based portal for the new registration of MSMEs.
Important Questions for Upcoming Examinations:
- Question: Who currently determines the definition of an MSME?
- Answer: It changes periodically and is updated in accordance with the current Cabinet.
- • Question: When is MSME Day observed?
- Answer: June 27.
- • Question: What is the primary function of SIDBI?
- Answer: To provide financial assistance and credit to Micro, Small, and Medium Enterprises.