Context: Recently, the Centre has revised the definition of micro, small and medium enterprises to give them the confidence to grow.
About New Defination

• Under the new definition, the distinction between manufacturing and services enterprises has been eliminated. 
• Under the new definition of MSMEs, the investment criteria for such enterprises have been revised upwards, while an additional criterion of turnover has been introduced.
• Under the new definition, manufacturing and services enterprises with investments up to Rs 1 crore and turnover up to Rs 5 crore will be classified as micro enterprises. 
• For small enterprises, the investment criteria has been revised upwards to Rs 10 crore, with the turnover criteria of Rs 50 crore added to the mix. 
• Enterprises with investment up to Rs 20 crore and turnover up to Rs 100 crore will be termed medium enterprises.

Earlier Concerns associated with it are

• "There always was this fear, in very successful MSMEs  that if they outgrow the size of what is defined as an MSME earlier, they'll lose the benefits that they get as an MSME itself.
• Outgrowing this definition meant outgrowing and going out of receiving benefits. Therefore MSMEs preferred to remain within the definition rather than grow.

Issues/ Problems faced by MSMEs in India:

• Access to Credit: Most banks are reluctant to lend to MSMEs because from the perspective of bankers, inexperience of these enterprises, poor financials, lack of collaterals and infrastructure.
• Poor Infrastructure: With poor infrastructure, MSMEs’ production capacity is very low while production cost is very high.
• Access to modern Technology: The lack of technological know-how and financial constraints limits the access to modern technology and consequently the technological adoption remains low.
• Access to markets: MSMEs have poor access to markets. Their advertisement and sales promotion are comparatively weaker than that of the multinational companies and other big companies. The ineffective advertisement and poor marketing channels makes it difficult for them to compete with large companies.
• Legal hurdles: Getting statutory clearances related to power, environment, labour are major hurdles. Further, laws related to the all aspects of manufacturing and service concern are very complex and compliance with these laws are difficult.
• Lack of skilled manpower: The training and development programs in respect of MSME`S development has been inadequate. Thus, there has been a constant crunch of skilled manpower in MSMEs.

Role of MSME in Indian economy

• Contribution to GDP: MSMEs contribute around 6.11% of the manufacturing GDP and 24.63% of the GDP from service activities as well as 33.4% of India’s manufacturing output. Further, the sector has consistently maintained a growth rate of over 10%.
• Leveraging Exports: MSMEs contribute around 45% of the overall exports from India.
• Employment Opportunities: Since the enterprises falling in this sector require low capital to start the business, it creates huge employment opportunities for many unemployed youths. MSMEs provide employment to around 120 million persons
• Fostering Inclusive Growth: MSME is constructing inclusive growth in  numerous ways through promoting non- agricultural livelihood at least cost, unbiased regional development,  large female participation, and providing a protection against deflation.

Hence, "A revision in the definition of MSMEs with an upward revision in their investment limit will help in the seamless expansion of small and medium businesses in the country. A robust MSME sector is key to improving the economic strength and resilience of the country and making it highly self-reliant and globally competitive.