MSME Definition and Classification — Policy Reforms

Entry	Year	Description	Impact
MSME Classification Amendment	2020	The Ministry of MSME notification dated June 26, 2020, introduced comprehensive changes to MSME classification criteria. The amendment added annual turnover as a classification parameter alongside investment, eliminated the distinction between manufacturing and service sectors, revised investment thresholds upward, and mandated that both criteria must be satisfied for category classification.	This amendment revolutionized MSME classification by making it more comprehensive and preventing misuse of benefits by larger enterprises. It simplified the registration process, enhanced verification mechanisms, and aligned the classification system with modern business realities. The change has improved targeting of government schemes and facilitated better policy implementation in the MSME sector.