ACMA, the apex body representing India’s auto component sector, has welcomed the amendment made by the Cabinet to the criteria for Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. The criteria was earlier based on investments made in plant and machinery has now been changed to annual turnover. 

Lauding the government,  Nirmal Minda, president, ACMA said, “This decision is indeed welcome, as over 80 percent of Indian auto component manufacturers in India are MSMEs. The earlier definition had become out-of-date as the investments by industry today far exceed the earlier prescribed slab.”

The new criteria is a step forward towards ease of doing business, and will bring transparency between the MSMEs and the regulatory authorities. Further, it will also help align MSMEs to the new indirect tax regime – the Goods & Services Tax (GST) – and pave the way for an increased direct and indirect employment in the MSME sector.

According to the new amendment, MSME will be categorised on the basis of their annual turnover instead of investment in plant and machinery/equipment as under:

- Micro enterprise: annual turnover that does not exceed Rs 5 crore.

- Small enterprise: annual turnover more than Rs. 5 crore but does not exceed Rs 75 crore.

- Medium enterprise: annual turnover that is more than Rs 75 crore but does not exceed Rs 250 crore.