MSME is the official class for smaller businesses under the MSMED Act, 2006. The test combines investment in plant, machinery or equipment and annual turnover. A business that crosses either limit moves to the next class.
The limits (from 1 April 2025, as of October 2026)
| Class | Investment up to | Turnover up to |
|---|---|---|
| Micro | ₹2.5 crore | ₹10 crore |
| Small | ₹25 crore | ₹100 crore |
| Medium | ₹125 crore | ₹500 crore |
Exports are left out of turnover for this test. The same limits apply to manufacturing and services.
Why the class matters
- Payment protection
- micro and small suppliers registered on Udyam must be paid within the agreed period, not more than 45 days, or 15 days where no period was agreed.
- Schemes
- credit guarantees, cluster development, technology and marketing support, and state incentives.
- Bank credit
- MSME loans count as priority sector lending.
In practice
By these limits a Rajkot casting unit with ₹60 crore of sales and ₹15 crore of machinery is a small enterprise, and a CA firm with 12 staff is usually micro. The class is a legal status. It says little about how complex the business is: many small enterprises run several godowns, dozens of job workers and hundreds of dealers.