BUSINESS COMES UNDER MSME

 

To check which type of business or industry comes under MSME?

 

We will have to check the NIC Classification List 2008 (NIC Code 2008) as available on Udyam Registration portal & also official memorandum issued on 27th June 2017.

 

In NIC code list most of the activities are eligible for MSME as manufacturer or service provider.

 

But as per office memorandum issued on 27th June 2017 clarified that the activities in Table 1 below would not be included in the manufacturing or services in accordance with Section 7 of the MSMED Act, 2006:-

 

Activities (NIC codes) not covered under MSMED Act, 2006 for registration as MSME:

 

Table 1

NIC Code	Business Activity
02	Forestry and logging
03	Fishing and aquaculture
45*	Wholesale and retail trade and repair of motor vehicles and motorcycles
46*	Wholesale trade except of motor vehicles and motor cycles 47
47*	Retail Trade except of Motor Vehicles and motor cycles
97	Activities of household as employees for domestic personnel
98	Undifferentiated goods and services producing activities of private households for own use
99	Activities of extraterritorial organization and bodies

 

 * As per Ministry of MSME's Office Memorandum dated 2nd July, 2021 has decided to include Retail and Wholesale trade as MSMEs for the limited purpose of Priority Sector Lending and they would be allowed to be registered on Udyam Registration Portal for the NIC Codes 45, 46 & 47 and activities mentioned as above.

The NIC 2 digit activity 01 – crop, animal production, hunting and related activities would also not be included as per Section 7 of the Act except for the sub-classes of activities as 5-digit level given in Table 2 below:

 

Table 2

NIC Code	Business Activity
01462	Production of eggs
01463	Operation of poultry hatcheries
01492	Bee-keeping and production of honey and beeswax
01493	Raising of silk worms, production of silk worm cocoons
01612	Operation of agricultural irrigation equipment
01620	Support activities for animal production
01631	Preparation of crops of primary markets i.e. cleaning, trimming, grading disinfecting
01632	Cotton ginning, cleaning and bailing
01633	Preparation of tobacco leaves
01639	Other post-harvest crop activities, n.e.c
01640	Seed processing for propagation

 

 

Activities mentioned in Table 2 above are covered for MSME registration.

 

Sub Section 1 of Section 7 of Micro Small or Medium Enterprises Development Act, 2006 provides for classification of enterprises engaged in manufacturing or production of goods as well as enterprises engaged in providing or rendering of services as micro, small or medium based on investment in plant and machinery and equipment respectively.

 

Classification of MSME enterprises (Whether Manufacturer or Rendering Services, Both have same criteria now)

 

An enterprise shall be classified as micro, small or medium enterprise on the basis of following criteria:

 

Micro	Where the investment in plant & machinery or equipment does not exceed ONE Crore rupees AND turnover doesn't exceed FIVE Crore rupees.
Small	Where the investment in plant & machinery or equipment does not exceed TEN Crore rupees AND turnover doesn't exceed FIFTY Crore rupees.
Medium	Where the investment in plant & machinery or equipment does not exceed FIFTY Crore rupees AND turnover doesn't exceed TWO HUNDRED & FIFTY Crore rupees.

 

Composite criteria of investment and turnover shall apply for classification of an enterprise as micro, small or medium.

 

CONCLUSION:

After above it is concluded that to check whether business comes under MSME.

First Check the Activities are not fall under excluding activities as per Official Memorandum dated 27th June 2017

AND

Investment or Turnover criteria should be within the limit as prescribed under Classification of enterprises for MSME.

 

If both above conditions are fulfilled then business/industry will come under MSME.

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DISCLAIMER:- THE ARTICLE HAS BEEN WRITTEN BY SUDHIR ARYA, COMPANY SECRETARY IN PRACTICE & STARTUP CONSULTANT. DUE CARE HAS BEEN TAKEN TO ENSURE THE CORRECTNESS OF INFORMATION. IT'S BASED ON THE RELEVANT INFORMATION AVAILABLE AT THE TIME OF WRITING IT. HOWEVER, THIS ARTICLE CAN'T BE CONSTRUCTED AS LEGAL OPINION AND WRITER WILL NOT BE LIABLE FOR ANY DIRECT OR INDIRECT RESULT FROM THIS ARTICLE. THIS ARTICLE IS ONLY FOR KNOWLEDGE SHARING INITIATIVE.

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