Q.Under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, an enterprise is classified into the Micro, Small, or Medium category on the basis of:
(A) Only the number of workers employed
(B) Only the investment in land and building
(C) Investment in plant and machinery/equipment, taken together with annual turnover
(D) Only the annual profit earned

The MSMED Act, 2006 classifies an enterprise using two criteria applied together, not any single measure like employee count or profit.

Work through each option against this composite two-criteria rule; only option (C) names both criteria the Act actually uses.

The MSMED Act, 2006, as revised, classifies an enterprise as Micro, Small, or Medium based on two criteria applied TOGETHER: its investment in plant and machinery/equipment, and its annual turnover. Neither criterion alone determines the classification.

Option-by-option analysis:

• (A) Incorrect — number of workers employed is not the statutory classification criterion under the MSMED Act.
• (B) Incorrect — investment in land and building is not the criterion; the Act specifically looks at plant and machinery/equipment.
• (C) Correct — investment in plant and machinery/equipment together with annual turnover is exactly the two-part test the Act uses.
• (D) Incorrect — annual profit is not the classification criterion.

Students often try to recall a specific rupee figure and get it wrong because the exact thresholds are revised periodically by government notification — the concept to remember for the exam is the TWO CRITERIA (investment + turnover), not a specific number.