Finance Minister Nirmala Sitharaman, on May 13, said the government had tweaked the definition of micro, small and medium enterprises (MSMEs).
The move is intended to provide MSMEs relief during the nationwide lockdown to contain the spread of COVID-19.
The finance minister also said the distinction between manufacturing and service units for MSMEs had been removed.
Under each category (micro, small and medium) the investment size criteria has been hiked to bring more companies under the definition of MSME.
Additional criteria of turnover has been included to the definition of MSMEs.
"Low threshold in MSME definition have created a fear among MSMEs of graduating out of the benefits and hence killing the urge to grow," the government said in a statement.
The measure is a part of the Rs 20 lakh crore economic package announced by Prime Minister Narendra Modi on May 12.
Sitharaman also announced a Rs 3 lakh crore collateral-free automatic loans for businesses, including MSMEs.
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