World MSME Forum demands separate policy framework for enterprises below ₹5 crore turnover

Ludhiana, August 29, 2026: The World MSME Forum has urged Prime Minister Narendra Modi to immediately review India's present MSME definition and create a separate Ministry, Department or dedicated policy framework for grassroots enterprises having an annual turnover below ₹5 crore.
World MSME Forum President Badish Jindal said that the present MSME definition has become excessively broad and fails to reflect the economic reality of the overwhelming majority of India's enterprises.
Citing ASUSE 2025 data, the Forum pointed out that 81.61% of MSMEs have turnover below ₹10 lakh, 93.79% below ₹25 lakh, 97.39% below ₹50 lakh, 98.94% below ₹1 crore and an astonishing 99.95% below ₹3 crore. In sharp contrast, under the present classification, a medium enterprise can have a turnover of up to ₹500 crore.
Jindal said, “The question before the Government is simple: Can a small enterprise with a turnover of ₹5 lakh or ₹10 lakh be expected to compete for policy attention, financial support and Government incentives with an enterprise having a turnover of ₹500 crore merely because both fall under the same MSME umbrella?”
The Forum also expressed serious concern over the condition of India's manufacturing MSMEs. According to the data cited, the average gross value output of a manufacturing enterprise has declined from ₹6.24 lakh to ₹5.33 lakh, while the share of employmentgenerating manufacturing MSMEs has declined from 11.73% to 10.99%.
At the same time, manufacturing MSMEs grew by only 3.60%, compared with growth of 6.93% in trading and 7.40% in services, indicating that India's MSME ecosystem is increasingly shifting away from manufacturing.
The data further reveals that the average fixed assets of a manufacturing MSME are only around ₹2.19 lakh, while only 16.5% of manufacturing MSMEs are registered under any department.
The Forum said that despite the Government increasing institutional credit limits, the average loan size of grassroots enterprises has actually declined from ₹25,471 to ₹23,062, proving that the financial requirements and realities of India's smallest enterprises are completely different from those of large companies included under the broad MSME definition. The World MSME Forum has therefore proposed a separate “Grassroots Enterprise” category for businesses with turnover below ₹5 crore, with simplified procedures for GST, taxation, labour compliance, environmental permissions, bank documentation, Government procurement and statutory reporting.
It has also demanded a dedicated small-ticket credit mechanism and special policy support for small manufacturing units, household and family enterprises, artisans, rural industries, women-led enterprises, first-generation entrepreneurs and informal businesses seeking formalisation.
“India does not merely need more MSME registrations; India needs stronger MSMEs. The real objective of Government policy should be to help enterprises grow from ₹5 lakh to ₹25 lakh, ₹1 crore, ₹5 crore, ₹25 crore and eventually become globally competitive companies,” Jindal said.
The Forum has also demanded the constitution of a high-level expert committee comprising representatives of the Ministry of MSME, Ministry of Finance, DPIIT, RBI, SIDBI, NITI Aayog, industry associations, economists and grassroots entrepreneurs to comprehensively review India's MSME classification and policy architecture.
The World MSME Forum has appealed to Prime Minister Narendra Modi to consider this reform on priority.
“Our average enterprise is extremely small, while our legal definition has become extremely large. India now needs precision, targeted support and a graduation-based MSME policy. A ₹5 lakh enterprise should not have to compete for Government policy attention with a ₹500 crore enterprise,” Baadish Jindal added.