Micro, Small and Medium Enterprises (MSMEs) are the engine of faster and inclusive growth. They also serve as seed beds of entrepreneurship, contribute in highest numbers in respect of input-output ratio, employment creation, degree of product diversification and so on. In spite of their unique contributions, MSMEs in India do not seem to be supported pragmatically by the governments. Several studies have found that, whether in respect of credit support, raw material support or fiscal elements, MSMEs were not given dueand suitable care. It may because of the sub-optimal understanding by the government, as expressed in the legal definitions, of MSMEs. According to a World Bank study, there are more than 60 definitions of small and medium industries used in 75 countries examined. In this background, the present paper attempts a historical review of legal understanding of MSMEs in Indiain order to find out their underlying characteristics. It also compares Indian and International approaches in defining MSMEs. This will enable the policymakers to understand the MSMEs better in considering for promotional and supportive programmes and schemes. The study finds that rather than only investment criterion based definition, a set of factors must be considered in identifying and distinguishing MSMEs.
SSIs/MSMEs, India, MSME (Development) Act 2006
