Q.What is the definition used by Government of India for Small Scale Industries?
Under the MSMED Act, 2006, a small enterprise has investment (in plant and machinery for manufacturing, or in equipment for services) above the micro limit but within ₹5 crore (manufacturing) or ₹2 crore (services).
The Government of India defines small scale industries on the basis of the investment in plant and machinery, a measure that fits India's socio-economic setting of scarce capital and abundant labour. Under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 (in force from October 2006), enterprises are classified into manufacturing and service enterprises:
- For a manufacturing enterprise, a small enterprise is one in which the investment in plant and machinery is more than ₹25 lakh but does not exceed ₹5 crore (a micro unit is up to ₹25 lakh and a medium unit is more than ₹5 crore but up to ₹10 crore).
- For a service enterprise, a small enterprise is one in which the investment in equipment is more than ₹10 lakh but does not exceed ₹2 crore (a micro unit is up to ₹10 lakh and a medium unit is more than ₹2 crore but up to ₹5 crore).
While calculating this investment, the cost of pollution control, research and development, industrial safety devices and such other items is excluded.
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