**Policy Summary: Revised Definition of MSMEs and PMEGP Project Cost Limits**
This document summarizes the Indian government's revised definition of Micro, Small, and Medium Enterprises (MSMEs) and the current status of project cost limits under the Prime Minister's Employment Generation Programme (PMEGP).
**Revised MSME Definition:**
Effective April 1, 2025, the definition of MSMEs has been revised according to the Budget announcement 2025 and Notification S.O. 1364(E) dated March 21, 2025. The investment and turnover limits have been revised to 2.5 and 2 times respectively for classification of MSMEs. Micro Enterprises are now defined as those with an investment of up to ₹2.5 crore in plant and machinery and a turnover of up to ₹10 crore.
**PMEGP Project Cost Limits:**
The maximum project cost ceiling admissible for Margin Money subsidy under PMEGP is ₹50 lakh for the manufacturing sector and ₹20 lakh for the business/service sector. Existing units seeking a second loan for upgradation are eligible for project costs up to ₹1.00 crore in manufacturing and ₹25.00 lakh in the service sector.
**Proposed Enhancement of PMEGP Project Cost Limit:**
Currently, there is no proposal under consideration to enhance the PMEGP project cost limit to ₹2.5 crore in line with the revised MSME definition. Consequently, no internal assessments, expert recommendations, or state-wise feasibility studies have been conducted regarding such an enhancement.
Key Entities Referenced
Ministry of Micro, Small and Medium Enterprises: The Indian government ministry responsible for the formulation and administration of rules, regulations and laws relating to micro, small and medium enterprises in India.
MSMEs: Micro, Small and Medium Enterprises. A category of businesses defined by investment and turnover limits.
Prime Minister's Employment Generation Programme (PMEGP): A credit-linked subsidy program in India aimed at generating employment opportunities by assisting entrepreneurs in establishing new micro enterprises.
SHRI KONDA VISHWESHWAR REDDY: Member of Parliament who raised questions regarding the revised definition of MSMEs and the PMEGP scheme.
SUSHRI SHOBHA KARANDLAJE: Minister of State for Micro, Small and Medium Enterprises who provided answers to the questions raised in the Lok Sabha.
Budget announcement 2025: Refers to the Union Budget of India for the year 2025, during which the revision of MSME definition was announced.
Notification SO. 1364E: A specific notification number that officially revises the definition of MSMEs, including investment and turnover limits.
Lok Sabha: The lower house of the Parliament of India.
GOVERNMENT OF INDIA
MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES
LOK SABHA
UNSTARRED QUESTION NO. 4777
TO BE ANSWERED ON: 21.08.2025
REVISED DEFINITION OF MSMEs
4777. SHRI KONDA VISHWESHWAR REDDY:
Will the Minister of MICRO, SMALL AND MEDIUM ENTERPRISES be pleased to state:
(a) whether the definition of Micro, Small and Medium Enterprises (MSMEs) has been
revised and if so, the new limits for micro enterprises;
(b) whether the project cost ceiling under the Prime Minister's Employment Generation
Programme (PMEGP) remains 25 lakh for manufacturing and 10 lakh for services;
(c) whether the Government is considering enhancement of the PMEGP project cost limit to
2.5 crore in line with the revised definition;
(d) if so, the current status of any such proposal; and
(e) whether any internal assessments, expert recommendations or State-wise feasibility studies
have been conducted regarding this enhancement and if so, the details thereof?
ANSWER
MINISTER OF STATE FOR MICRO, SMALL AND MEDIUM ENTERPRISES
(SUSHRI SHOBHA KARANDLAJE)
(a): The definition of Micro, Small and Medium Enterprises (MSMEs) has been revised as per
the Budget announcement 2025. The investment and turnover limits have been revised to 2.5 and
2 times respectively for classification of MSMEs vide Notification SO. 1364(E) dated 21.03.2025
with effect from 01.04.2025. The revised limit for Micro Enterprises is classified with an
investment up to ₹2.5 crore in plant and machinery and a turnover up to ₹10 crore.
(b) to (e): The maximum project cost ceiling admissible for Margin Money subsidy under the
Prime Minister's Employment Generation Programme (PMEGP) is ₹50 lakh in the manufacturing
sector and ₹20 lakh in the business/service sector. Further, a second loan for upgradation of
existing units is admissible for project cost up to ₹1.00 crore in the manufacturing sector and
₹25.00 lakh in the service sector respectively.
No such proposal is in consideration to enhance project cost limit to 2.5 crore under the
PMEGP in line with the revised definition. Consequently, there are no internal assessments, expert
recommendations or State-wise feasibility studies available regarding enhancement of the PMEGP
project cost limit.
*****