List of Businesses That Come Under the MSME Sector

Micro, Small and Medium Enterprises are the driving force of India’s economy. Despite their smaller scale, they fuel job creation, foster innovation and contribute significantly to national development.

The Government of India classifies MSMEs based on their investment in plant, machinery or equipment, as well as their annual turnover, covering both the manufacturing and service sectors.

MSMEs encompass a diverse range of enterprises, from small local shops and artisanal units to growing startups and small factories. They contribute around 30% to India’s GDP, employ over 120 million people and generate nearly half of the country’s exports. Due to their scale, MSMEs offer agility, local engagement and diverse employment opportunities that larger companies often cannot.

The government recognises the value of MSMEs and extends support through easier financing options, subsidy schemes, tech advancement programs and regulatory simplification. These initiatives strengthen their capabilities for growth, innovation and global competitiveness.

As part of the Union Budget 2025, Finance Minister Nirmala Sitharaman proposed key changes to the MSME classification framework. The investment cap has been expanded by 2.5 times and the turnover ceiling has been increased twofold.

These updated norms are implemented starting April 1, 2025. The revision aims to boost business expansion, encourage innovation and strengthen the overall ecosystem for micro, small and medium-sized enterprises in India.

Take a quick look at the revised MSME classification norms introduced in the 2025 Union Budget.

Access to Collateral-Free Credit and Financial Support

MSMEs can take advantage of various government-backed financial schemes. It includes the CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises), which offers collateral-free loans. This backing fuels growth by easing financial constraints.

Tax Incentives & Regulatory Perks

Tax breaks are among the numerous benefits of being a registered MSME. These enterprises can retain more of their earnings with lower income tax rates and GST relaxations and channel that money directly into scaling up.

Government Procurement Opportunities

MSMEs benefit from special provisions in government procurement policies. Joining the Government e-marketplace gives MSMEs a real opportunity to secure public contracts. It opens up a huge customer base and creates the potential for steady, long-term earnings.

Eligibility for Skill Development and Technology Upgradation Programs

The government offers countless schemes to refine the skills of the workforce and upgrade technology within MSMEs. Initiatives like the Skill India Mission and technology upgradation programs empower businesses to improve productivity and competitiveness.

Employment Generation

MSMEs employ more than 120 million individuals, making them the second-biggest employment driver in India after agriculture. Their capacity to create jobs with limited investment is especially important for expanding job access in Tier 2 and Tier 3 regions. They provide livelihood opportunities across various sectors, including manufacturing, services, retail and agribusiness.

Regional Development and Rural Upliftment

One of the defining strengths of MSMEs is their presence in semi-urban and rural areas. By promoting decentralised industrial growth, they help reduce migration to overcrowded urban centres. MSMEs also support traditional and cottage industries, such as khadi, coir and handloom, thereby preserving local craftsmanship and uplifting rural economies.

Contribution to Exports

Nearly half of India’s exports come from MSMEs, making them key players in the country’s global trade. They are especially active in areas such as textiles, leather goods, jewellery, engineering products and processed food. Even with compact teams, these businesses show that small operations can drive big export numbers.

Role in Innovation and Tech Adoption

Contrary to the belief that innovation comes only from large enterprises, many micro, small and medium-sized enterprises are nimble innovators. They quickly adapt to market trends, adopt digital tools and bring in process efficiencies. Tech-enabled MSMEs in fintech, edtech and eCommerce are rapidly changing the business landscape.

The Backbone for Large Industries

MSMEs act as vital suppliers, vendors and service partners to large-scale industries. Whether it is auto parts, pharmaceutical packaging or textile processing, large enterprises depend on MSMEs to sustain production, reduce costs and remain agile. They form the invisible but essential links in India’s industrial value chains.

MSME businesses in India can be broadly divided into two main categories:

Manufacturing MSMEs

These enterprises focus on the production or processing of goods and services. They include industries such as textiles, food processing, machinery, chemicals, electronics and handicrafts. Manufacturing MSMEs invest in machinery, plants and equipment to create tangible products.

Service MSMEs

Service-based MSMEs deliver intangible products, offering support and expertise across various areas, including information technology, logistics, consultancy, education, repair services and digital marketing. They generally require less investment in physical assets but are vital to the economy.

Both categories contribute significantly to India’s GDP, exports and employment generation, with the government providing tailored support to encourage growth in each.

Here is a structured table summarising the list of Industries under MSME, based on government classification (manufacturing & services) and investment/turnover limits (₹2.5/10/25 Cr investment and ₹10/100/500 Cr turnover):

Note: This is a representative list, not an exhaustive one. As long as the enterprise aligns with the MSME investment/turnover thresholds and falls under the manufacturing or service sectors, it qualifies.

As noted earlier, there are specific types of businesses that are excluded from the MSME classification, even if they meet the prescribed investment and turnover thresholds. Since the core objective of the MSME framework is to support businesses that contribute to broader economic development, certain sectors are deemed ineligible for registration.

These excluded businesses are as follows:

• Enterprises involved in gambling, betting or similar speculative activities.

• Businesses related to forestry and logging may pose environmental concerns and are generally not promoted by the government.

• Firms engaged in dealings with international entities or organisations, since the MSME framework is designed to uplift local businesses.

• Agricultural and fishing-related ventures fall outside the scope of the manufacturing and service sectors.

• Services provided by domestic workers that are not recognised as formal business activities.

Credit-Linked Capital Subsidy Scheme

The CLCSS Scheme supports technology upgradation in micro-enterprises by offering financial assistance. Under this scheme, eligible businesses can avail of a capital subsidy amounting to 15% of the total project cost. The main aim is to enhance productivity and competitiveness by enabling enterprises to adopt modern technology and improve their operational efficiency.

The Micro and Small Enterprises Cluster Development Programme

The MSE-CDP Scheme focuses on strengthening infrastructure and creating common facility centres within industrial clusters. By encouraging businesses to work closely together, the scheme enhances specialisation and sharpens their competitive edge. It also makes a space for shared learning and strong partnerships that support lasting success.

Technology Upgradation Scheme

The TUS offers financial support to small enterprises aiming to adopt modern and advanced technologies. Here, eligible businesses can receive assistance covering up to 15% of their project costs. By enabling access to updated technology, the scheme helps small enterprises improve product quality, increase productivity and strengthen their market position.

Market Development Assistance Scheme

The MDA Scheme offers support for businesses to participate in trade fairs and exhibitions, enabling them to showcase their products and services to a broader audience. It also provides financial assistance for branding and marketing efforts, allowing the enterprises to strengthen their market presence.

Credit Guarantee Fund Trust for Micro and Small Enterprises

The CGTMSE Scheme helps banks feel more secure when lending to medium-sized enterprises. Enterprises can access the funds they need more easily since it has lower credit risks. It enables them to scale and expand their operations.

Covering everything from small-scale factories to tech-driven service firms, India's MSME business list reflects the depth and diversity of its entrepreneurial spirit. They are one of the main reasons India's economy continues to grow and thrive.

However, as these enterprises grow and evolve, they also face risks such as property damage, operational interruptions or workforce challenges that can threaten their progress.

This is where SME insurance becomes essential. Businesses need protection tailored to their unique needs, which is why business insurance for small business owners is more than just a safety net. It is a strategic investment.

Taking care of employees is just as important as growing the business. TATA AIG's labour insurance policy provides the protection they deserve, giving them peace of mind. It keeps your business compliant and shows your employees you have got their backs.

Securing the right insurance is crucial for MSMEs seeking to expand while maintaining protection. Solutions from TATA AIG help protect what matters most, allowing businesses to stay focused on developing and innovating.