Government of India has enacted Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. As per the Act definition of MSME is as under:-
(a) Enterprises Engaged in Manufacture or Production, Processing or Preservation of Goods:-
(i) Micro Enterprise. Investment in plant & machinery does not exceed Rs. 25 lakh;
(ii) Small Enterprise. Investment in plant and machinery is more than Rs. 25 lakh but does not exceed Rs. 5 crore; and
(iii) Medium Enterprise. Investment in plant and machinery is more than Rs.5 core but does not exceed Rs.10 core.
Note: Investment in plant & machinery is original cost excluding land, building and items specified by Ministry of Small Scale Industries vide its notification No.S.O.1722 (E) dated October 5, 2006.
(b) Enterprises Engaged in Providing or Rendering of Services and whose investment in equipment (original cost excluding land and building and furniture, fittings and other items not directly related to the service rendered or as may be notified under the MSMED Act, 2006 are specified below:-
(i) A Micro enterprise is an enterprise where the investment in equipment does not exceed Rs. 10 lakh;
(ii) A Small enterprise is an enterprise where the investment in equipment is more than Rs.10 lakh but does not exceed Rs. 2 crore; and
(iii) A Medium enterprise is an enterprise where the investment in equipment is more than Rs. 2 crore but does not exceed Rs. 5 crore.