New Delhi, Apr 12 (KNN) Several small businesses and industry groups are urging the government to reverse the revised definitions of Micro, Small, and Medium Enterprises (MSMEs), arguing that the changes are hurting truly small businesses. 

Laghu Udyog Bharati, an organization representing over 48,000 micro and small businesses, has formally requested the government to restore the earlier MSME classifications.  

The group says the current definitions, introduced in 2020, allow larger businesses to enjoy benefits meant for smaller ones, leaving genuine micro units at a disadvantage.

Under the revised criteria, MSMEs are now defined based on both investment and turnover. For instance, a business with up to Rs 1 crore investment and Rs 5 crore turnover qualifies as a micro-enterprise. 

Critics argue that this broad definition includes businesses that are much larger than traditional small units, allowing them to compete for subsidies, credit benefits, and government contracts meant for smaller players.

Many small manufacturers report that they are losing out on tenders and financial assistance because bigger firms, now also classified as MSMEs, dominate the space. 

They say this goes against the original purpose of the MSME category, which was to protect and promote truly small and local enterprises.

Laghu Udyog Bharati is also calling for the creation of a separate category for “real micro” units with simplified compliance, exclusive tenders, and targeted incentives.

The Ministry of MSME has not yet responded to the demand, but with elections around the corner, the issue may gain more attention. Experts say a balanced policy is needed to ensure that support reaches the smallest players without excluding growing businesses.

(KNN Bureau)