Equipment defination

The classification of Micro, Small, and Medium Enterprises (MSMEs) in India was revised effective April 1, 2025. Under the current framework, enterprises are categorized based on a composite criteria of both investment in plant and machinery/equipment and annual turnover.

To be classified as an MSME, an enterprise must meet the thresholds for both parameters. If an enterprise exceeds the limits of its current category in either parameter, it is reclassified to the next higher category.

Revised MSME Classification Criteria (Effective 2026)

Key Points for Classification

• Composite Criteria: Both investment and turnover thresholds must be met. For example, to be a "Small" enterprise, your investment must not exceed ₹25 crore and your turnover must not exceed ₹100 crore.

• Export Exclusion: When calculating annual turnover for MSME classification, export turnover is excluded. This allows businesses engaged in international trade to retain their MSME status even if their total turnover is higher.

• Uniformity: The same classification applies to both manufacturing and service sectors.

• Investment Valuation: For classification purposes, the investment in plant and machinery or equipment is based on the Written Down Value (WDV) from the latest audited balance sheet, not the original purchase price.

Summary: As of 2026, MSMEs are classified based on a dual-threshold system of investment and annual turnover. The thresholds are up to ₹2.5cr/₹10cr for Micro, up to ₹25cr/₹100cr for Small, and up to ₹125cr/₹500cr for Medium enterprises. Export turnover is excluded from these calculations.