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Micro, small, and medium enterprises' Gross value added (GVA) across India accounted for over **** percent of India's gross domestic product (GDP) in the financial year 2024. This was an increased contribution as compared to the previous year. Additionally, MSMEs account for a significant part of the country's exports.

Classification of MSMEs in India

  As per the upward revision announced in 2020, the definition of micro manufacturing and services units was increased to ** million Indian rupees of investment and ** million rupees of turnover; the small unit was increased to 100 million investment and *** million turnover. The limit of the medium unit was increased to *** million in investment and *** billion in turnover. The objective of this change was to ensure that MSMEs can exhaust the state benefits without the fear of outgrowing themselves. However, critics argue that the gap defining medium enterprises is too wide and may create unfair competition.

Informal micro enterprises

Micro enterprises account for the majority share of the MSME sector in India, and a significant number of these enterprises are informal. Cost of compliance, complex labor laws, and lack of awareness about the benefits of formalization could be some reasons for keeping the micro-enterprises unregistered. Since businesses in the informal economy do not contribute to the tax base and tend to remain small with limited access to formal finance, it impairs a country’s ability to truly gauge the socio-economic metrics.