Q.Which year the MSMED Act passed?

The size of a business unit can be measured by several parameters — the number of persons employed, the capital invested, or the turnover of the business. To keep a single, consistent standard, the Government of India defines MSMEs on the basis of investment in plant and machinery and turnover. This measure deliberately suits India's setting, where capital is scarce and labour is abundant.

The three categories are:

• Micro — investment up to 1 crore, turnover up to 5 crore.
• Small — investment up to 10 crore, turnover up to 50 crore.
• Medium — investment up to 50 crore, turnover up to 250 crore.

Most MSMEs are micro units: about 99.4% are micro, roughly 0.52% small and only about 0.1% medium.

All three types were brought under one umbrella by the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, in force from October 2006, which addressed concerns of definition, credit, marketing and technology upgradation.