The full form of SME is Small and Medium-sized enterprises. The workforce of SMEs is constrained, and investments in assets like plant and equipment cost less than a specific threshold. SME development and expansion are essential to the country’s industrial sector. Additionally, it encourages people in various economic sectors to innovate and become more competitive.
Different SMEs
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The SME definition in India is based on the amount of investment by the sectors it belongs to, per section 7 of the Micro, Small & Medium Enterprises Creation Act of 2006.
In the case of Industrial Enterprises
- Micro Enterprises – Expenditure in the plant & equipment doesn’t cross 25 lakh Rs.
- Small Enterprises – Plant and equipment expenditure amounts to be more than 25 lakh Rs, but it does not exceed five crore Rs.
- Medium Enterprises – Revenue in the plant and equipment is more than five crore Rs but does not cross ten crore Rs.
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In the case of Service Companies
- Micro Enterprises – Spending on tools and equipment should not cross 10 lakh Rs.
- Small Enterprises – Spending on tools and equipment is more than 10 Lakh Rs but does not cross two crore Rs.
- Medium Enterprises – Spending on tools and equipment is more than two crore Rs but does not reach five crore Rs.