Revised Definition of MSMEs- Need for clarity and further broadening of Turnover limit criteria of definition: PHD Chamber

No.PR-74 May 15, 2020 New Delhi Revised Definition of MSMEs- Need for clarity and further broadening of Turnover limit criteria of definition: PHD Chamber While appreciating the extensive relief measures announced by the Hon’ble Finance Minister for MSMEs and other social segments in the first two tranches of Rs 20 lakh crore support package, Dr D K Aggarwal, President, PHD Chamber of Commerce and industry, said in a press statement issued here today that these measures are a major breakthrough in the reforms for MSMEs to mitigate the daunting impact caused by pandemic COVID-19. The much needed and eagerly awaited comprehensive relief package, widened definition of MSMEs along with other path breaking reforms announced by the Government will ensure that the MSMEs are able to resume, restart and revive from the current distressed times, said Dr D K Aggarwal. However, PHD Chamber seeks clarity from the Government regarding the new definition of MSMEs which prescribes that investment limit and turnover criteria have to be met for an enterprise to be termed as MSME, said Dr Aggarwal. PHD Chamber has written to Hon’ble Prime Minister’s Office, Ministry of Finance and MSMEs for clarity and further broadening of turnover limit criteria of definition to the level of Rs 250 crores, said Dr.DK Aggarwal. PHD Chamber has suggested that from the Investment and Turnover criteria, if any one of the two conditions is met, then entity should be classified as MSME. It will percolate greater benefits to achieve the objectives behind widening of the definition of MSMEs. Thus the word used for these two conditions should be OR not AND to make it clear that if any enterprise meets one of the criteria then it would qualify to be MSME said Dr D K Aggarwal. PHD Chamber suggests that if it is only on the basis of one criteria then that should be on turnover criteria, said Dr Aggarwal. It is suggested that turnover limits should remain unchanged for Micro Enterprise where the annual turnover does not exceed five crore rupees, for Small Enterprise more than five crore rupees but does not exceed Rs 75 crore and for Medium Enterprise more than seventy five crore rupees but does not exceed Rs 250 crore, said Dr Aggarwal. In case both of the criteria are made applicable for the classification of MSMEs, it is apprehended that even some of the existing MSMEs would go out of the MSME classification because even though their investment may be within Rs 10.0/20.0 crore but their turnover exceeds Rs 100 crore, said Dr Aggarwal. The objectives of Expansion, Growth and Technology Upgradation of MSMEs for which the definition is being revised, would not be achievable if both criteria are applied together, said Dr Aggarwal. The Trading companies should also be the included in the definition of MSMEs, along with manufacturing and service enterprises as Trading Enterprises are currently not considered for such classification for many purposes, said Dr Aggarwal. This will allow trading companies to access the concessions being made available to MSMEs and help them leverage greater economic benefits in the coming times, said Dr D K Aggarwal. The suggested criteria of turnover is easy to apply, internationally applied and understood, involves less complications or paperwork and can be verified from GST returns or by obtaining information from GST Network, said Dr Aggarwal. Going ahead, the suggested turnover limit will promote the ease of doing businessñ as the process of identification and dealings with MSMEs would become simpler and faster, said Dr Aggarwal. Ends. Media Division PHD Chamber of Commerce and Industry