New Delhi, Mar 27 (KNN) The Department-Related Parliamentary Standing Committee on Industry has recommended the creation of a separate ‘nano enterprise’ category to better support India’s smallest businesses, while flagging structural and fiscal concerns in the MSME ecosystem.
The panel, chaired by Tiruchi Siva, presented its 333rd report on the Demands for Grants (2026–27) of the Ministry of Micro, Small and Medium Enterprises in Parliament.
Need for a new ‘nano enterprise’ category
The committee’s key recommendation is the introduction of a distinct ‘nano enterprise’ classification with an investment threshold of around Rs 10 lakh, a segment currently not recognised under India’s MSME framework.
It noted that of the 7.61 crore enterprises registered on the Udyam portal as of January 31, 2026, nearly 99.3 percent fall under the micro category. In comparison, only 4.88 lakh are classified as small and just 36,816 as medium enterprises.
The report highlighted that the existing classification groups vastly different businesses together, from small household units with minimal tools to relatively larger firms with investments running into crores, leading to uniform treatment in terms of credit, subsidies and scheme eligibility.
Impact of revised MSME thresholds
The issue has been exacerbated by the April 2025 revision in MSME classification limits, which raised the micro enterprise investment ceiling from Rs 1 crore to Rs 2.5 crore and turnover threshold from Rs 5 crore to Rs 10 crore.
While aimed at supporting business growth, the committee observed that this has had unintended consequences, with relatively larger firms now falling within the micro category and potentially crowding out smaller, vulnerable enterprises from accessing benefits.
Kerala model cited as precedent
The panel pointed to Kerala as a successful example, where a nano enterprise category has already been implemented for units with investments up to Rs 10 lakh.
The state has rolled out targeted support measures such as interest subvention, margin money assistance and schemes to promote household enterprises.
According to the committee, this demonstrates both the feasibility and necessity of introducing such a category at the national level.
Concerns over budget allocations
The report also raised concerns about fiscal transparency. It noted that out of the MSME Ministry’s total budget estimate of Rs 24,566.27 crore for FY2026–27, Rs 9,000 crore (36.6 percent) has been allocated to the Guaranteed Emergency Credit Line (GECL), a scheme that effectively closed in March 2023 and has seen no expenditure in the last two financial years.
The committee described this as a ‘phantom allocation’ that inflates budget figures and obscures the actual developmental outlay, which stands closer to Rs 15,566 crore.
Delays in implementation and payment crisis
The panel further observed that six out of eight MSME-related announcements made in Budget 2025–26 remain unimplemented, including proposals such as credit cards for 10 lakh micro enterprises and term loans for women and SC/ST first-time entrepreneurs.
It recommended that all budget announcements should be operationalised within six months.
Additionally, the report flagged a significant delayed payment crisis of Rs 8.1 lakh crore affecting MSMEs. It noted that the Online Dispute Resolution portal, launched in October 2025 to address such issues, has disposed of only 17 cases over an eight-month period, indicating limited effectiveness so far.
(KNN Bureau)
