The new MSME thresholds, and why a larger company may still qualify
India doubled its turnover limits for small and medium enterprises in April 2025. Many companies that assumed they had outgrown MSME status have not.
Whether a company counts as a micro, small or medium enterprise is not a label. It determines access to priority sector lending, the credit guarantee scheme, statutory protection on delayed payments and several procurement preferences. The definitions changed materially in 2025.
The revised limits
By notification S.O. 1364(E) of 21 March 2025, effective 1 April 2025, the Ministry of MSME revised the classification under the MSMED Act, 2006. Investment in plant, machinery or equipment limits rose by two and a half times and turnover limits doubled:
Micro enterprises: investment up to ₹2.5 crore and turnover up to ₹10 crore. Small enterprises: investment up to ₹25 crore and turnover up to ₹100 crore. Medium enterprises: investment up to ₹125 crore and turnover up to ₹500 crore.
An enterprise that exceeds either limit for its category moves up to the next one, but it is not moved down unless it falls below both.
Why it matters for financing
A company with ₹80 crore of turnover that was a medium enterprise under the old rules may now be a small enterprise. That can bring it within the scope of the CGTMSE guarantee, now available up to ₹10 crore, and of the Reserve Bank's 2025 directions prohibiting pre-payment charges on floating-rate business loans to micro and small enterprises.
It also extends to more suppliers the protection of Section 15 of the MSMED Act — payment within forty-five days — reinforced for buyers by Section 43B(h) of the Income-tax Act.
A practical step
Classification is based on the Udyam registration and the data drawn into it from income-tax and GST filings. A company should confirm that its registration reflects its current classification before approaching a lender, and should be ready to explain it: a credit officer will check.
This article is general information about the financing landscape, current as of its publication date. It is not financial, legal or tax advice; regulations change, and every company’s position is different.
