Union Minister for Micro, Small and Medium Enterprises (MSME) Giriraj Singh on Thursday said the sector has been saved from "inspector raj" through changes in classification of enterprises from "investment in plant and machinery/equipment" to annual turnover.
"We have rescued the MSME sector from 'inspector raj'. This change in classification will improve the ease of doing business and bring erstwhile MSMEs in the formal sector," Singh told reporters here.
The Minister said the change in MSME classification will also help in skill development and promote start-ups.
The Union Cabinet on Wednesday approved the change in the definition of MSMEs according to which the enterprises with an annual turnover not exceeding Rs five crore will fall under "micro" enterprises.
Accordingly, "small" enterprise will be defined as a unit where the annual turnover is more than five crore rupees but does not exceed Rs 75 crore, while "medium" enterprise will be defined as a unit where the annual turnover is more than seventy five crore rupees but does not exceed Rs 250 crore.
"This will encourage ease of doing business, make the norms of classification growth oriented and align them to the new tax regime revolving around GST (Goods and Services Tax)," the government said.
On Wednesday, the Reserve Bank of India allowed an extension to the MSMEs of up to 180 days to clear their loans to banks to provide relief to the sector affected severely by the GST implementation.
In addition, the RBI also removed credit caps on MSMEs offering services in the priority sector.
Finance Minister Arun Jaitley, in his Budget presentation on February 1, had also announced relief for boosting the MSME sector -- the largest employer in the country -- by reducing the corporate taxation rate to 25 per cent for companies with turnovers of up to Rs 250 crore.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)