Q.State the meaning of Micro, Small and Medium Enterprises (MSMEs).

MSMEs are manufacturing or service business units that the law places into one of three size tiers based on their investment and turnover, so that each tier can receive support suited to its scale.

The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 is the law that formally defines and classifies MSMEs in India. Before this Act, small units were classified under the Industries (Development and Regulation) Act, 1951 mainly as "small-scale industries" purely on the basis of investment in plant and machinery, and this definition did not clearly cover service enterprises at all.

The MSMED Act, 2006 widened the definition in two ways. First, it explicitly covers both manufacturing enterprises (engaged in production or manufacture of goods) and service enterprises (engaged in providing or rendering services) under a single law. Second, since a 2020 notification, it classifies every such enterprise into one of three tiers — micro, small or medium — using a composite criterion of investment in plant and machinery/equipment together with annual turnover.