The Union Cabinet at its meeting on June 1 has approved changes to the definition of micro, small and medium Enterprises (MSMEs). Raising the turnover limit for medium enterprises to Rs 250 crore, the government aims to broaden the scope of MSMEs.

Union Minister Prakash Javadekar said the new definition of MSMEs would benefit units. Enterprises with Rs 1 crore investment and Rs 5 crore turnover would now qualify as micro enterprises.

Businesses with an investment of less than Rs 10 crore and turnover less than Rs. 50 crore will now be classified as small enterprises.

The definition for medium enterprises has been revised upwards to an investment of Rs 50 crore and a turnover of Rs 250 crore.

Finance Minister Nirmala Sitharaman, on May 13, announced a tranche of six measures for the MSME sector, including revision in the definition of MSMEs. The definitions have been further revised since the announcements under the Atmanirbhar Bharat package.

At present, around 63.4 million MSME units in India contribute around 6.11 percent of manufacturing GDP and 24.63 percent of services GDP as well as 33.4 percent of India's manufacturing output. They provide more than 11 crore jobs.

Due to the lockdown, most MSMEs have working capital issues and have been facing a cash crunch, rendering it difficult for them to carry on work and pay salaries.

The government has also announced a Rs 20,000 crore distressed asset fund to aid stressed MSMEs. Further, a Rs 50,000 crore equity infusion via a fund of fund has been announced for MSMEs.