As per Notification No. S.O. 1364(E), dated 21st March 2025
Issued by the Ministry of Micro, Small and Medium Enterprises under Section 7 of the MSMED Act, 2006
Overview
In a major policy update aimed at strengthening India’s MSME ecosystem, the Ministry of Micro, Small and Medium Enterprises (MoMSME) has revised the investment and turnover thresholds used for classification of Micro, Small, and Medium Enterprises (MSMEs). The changes were notified via Notification No. S.O. 1364(E) dated 21st March 2025, and will come into force from April 1, 2025.
This upward revision replaces the thresholds earlier notified in June 2020 and is aligned with the government’s broader vision to provide continued support to fast-growing MSMEs, particularly in the post-pandemic and inflationary context.
Revised Classification Criteria (Effective April 1, 2025)
| Enterprise Category | Investment in Plant & Machinery / Equipment | Annual Turnover |
|---|---|---|
| Micro Enterprise | ≤ ₹2.5 crore (earlier ₹1 crore) | ≤ ₹10 crore (earlier ₹5 crore) |
| Small Enterprise | ≤ ₹25 crore (earlier ₹10 crore) | ≤ ₹100 crore (earlier ₹50 crore) |
| Medium Enterprise | ≤ ₹125 crore (earlier ₹50 crore) | ≤ ₹500 crore (earlier ₹250 crore) |
Objectives of the Revision
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Promote Scale Without Loss of Benefits: Many growing enterprises were falling out of MSME benefits due to static thresholds; the revision ensures extended support as they scale.
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Increase Credit Access: Higher eligibility limits facilitate greater access to collateral-free loans and credit guarantee schemes.
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Boost Procurement Participation: More businesses can now qualify for MSME-reserved quotas in government tenders under the Public Procurement Policy.
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Align with Inflation and Capital Cost Trends: The thresholds have been updated to reflect the economic realities of 2025.
Compliance Requirements & Action Points
1. For Existing MSME Registrants (Udyam Portal)
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No immediate re-registration is required if turnover/investment remains within revised limits.
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However, businesses moving into a higher category under the new thresholds (e.g., from Micro to Small) must ensure their Udyam portal profile is updated accordingly.
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Enterprises should keep investment and turnover data (as per latest audited financials or GST returns) updated on the Udyam portal to avoid mismatch.
Applicable Format:
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Udyam Registration (online self-declaration)
https://udyamregistration.gov.in -
Updates can be made by logging in using PAN and OTP-based verification.
Due Date / Timeline:
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While no fixed compliance date has been prescribed, enterprises are advised to update their status within a reasonable period from April 1, 2025, to ensure accurate categorization for credit-linked and procurement benefits.
2. For New Enterprises
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Entities commencing operations after April 1, 2025, shall be classified under the revised criteria at the time of Udyam registration.
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PAN and GST-linked data will continue to be auto-pulled from government databases.
Advisory for Professionals & CFOs
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CFOs and compliance officers should review the financial position of their enterprise vis-à-vis the new limits and assess whether an update in MSME classification is required.
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Update internal records and documentation (e.g., MSME declaration for vendors, trade credit arrangements, tender eligibility).
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Evaluate implications on existing government tenders, subsidies, and credit arrangements, where MSME status is a qualifying criterion.
Reference
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Notification No. S.O. 1364(E), dated 21st March 2025
[Available on e-Gazette: egazette.nic.in or msme.gov.in]
Conclusion
This revision to MSME classification thresholds is both timely and strategic. It allows businesses room to grow without losing out on government-backed schemes, and aligns policy with the practical challenges of inflation, capital costs, and scale. Enterprises and professionals are advised to take stock of their classification and ensure necessary updates are completed in a timely and accurate manner.
