Q.Distinguish between Micro, Small and Medium Enterprises as defined under the MSMED Act, 2006.

The three tiers differ only in scale, not in kind — each is simply a bigger investment-and-turnover band than the one before it.

All three categories — micro, small and medium — are defined by the same MSMED Act, 2006 mechanism (the composite criterion of investment in plant & machinery/equipment plus annual turnover); they differ only in the ceiling values that separate one tier from the next.

| Basis | Micro Enterprise | Small Enterprise | Medium Enterprise |

|---|---|---|

| Investment in Plant & Machinery/Equipment | Does not exceed Rs. 1 crore | Does not exceed Rs. 10 crore | Does not exceed Rs. 50 crore |

| Annual Turnover | Does not exceed Rs. 5 crore | Does not exceed Rs. 50 crore | Does not exceed Rs. 250 crore |

| Typical examples | Small tailoring units, petty manufacturing, village handicrafts | Small workshops, small-scale component manufacturers | Mid-sized manufacturing plants, larger component/auto-ancillary units |

| Relative access to institutional credit | Weakest; most dependent on collateral-free guarantee schemes | Better than micro, but still limited compared to large industry | Best among the three, closer to formal-sector lending terms |

(The rupee figures above reflect the 2020 notification and are revised periodically — the relative ordering micro < small < medium on both investment and turnover is the stable, examinable fact.)

All three tiers are eligible for Udyam Registration and the broad basket of MSME schemes described elsewhere in this chapter, but the intensity of government support (subsidy rates, priority in credit-guarantee cover, reservation in tenders) is generally weighted most heavily towards micro enterprises, tapering off towards the medium tier.