Q.Which of the following is NOT used as a criterion to classify an enterprise as micro, small or medium under the MSMED Act, 2006 (as amended)?

A small enterprise is the middle class of MSME under the MSMED Act, 2006, defined by its investment in plant and machinery (for manufacturing) or in equipment (for services) lying between the micro and medium limits.

Small Enterprise

Under the MSMED Act, 2006, a small enterprise is defined by its investment, as follows:

• Manufacturing small enterprise: investment in plant and machinery is more than Rs 25 lakh but does not exceed Rs 5 crore.
• Service small enterprise: investment in equipment is more than Rs 10 lakh but does not exceed Rs 2 crore.

Small enterprises play an important role in creating employment, promoting entrepreneurship and supporting large industries as ancillary units. (These are the original MSMED Act limits that form part of the AP Intermediate syllabus; the Government has since revised the classification using investment and turnover together.)

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Manufacturing enterprises are units engaged in the production or processing of goods by converting raw materials into finished products with the help of plant and machinery; under the MSMED Act they are grouped, along with service enterprises, into micro, small and medium categories on the basis of investment and turnover.

Under the classification of Micro, Small and Medium Enterprises (MSMEs), manufacturing enterprises are those that are engaged in the manufacture or production of goods — the processing or conversion of raw materials into finished or semi-finished products, carried on with the help of plant and machinery. They are one of the two broad categories recognised under the MSMED Act, the other being service enterprises. Each category is further divided into micro, small and medium enterprises according to the limits of investment in plant and machinery and annual turnover. Manufacturing enterprises form the production backb …