Mid-Corporates Now Classified as MSMEs: What This Means for Your Business

The recent updates in MSME classification under the Union Budget 2025-26 have brought a significant change for mid-sized companies. Many businesses that previously did not qualify as Micro, Small, and Medium Enterprises (MSMEs) are now included under this category. This reclassification offers a mix of benefits, financial opportunities, and compliance relief while also introducing strategic considerations that businesses must evaluate.

Why Are Mid-Corporates Now MSMEs?

The government has increased the investment and turnover limits for MSME classification, allowing more businesses to qualify under this category:

Category	Investment Limit	Turnover Limit
Micro	Up to ₹2.5 Cr	Up to ₹10 Cr
Small	Up to ₹25 Cr	Up to ₹100 Cr
Medium	Up to ₹125 Cr	Up to ₹500 Cr

Previously, mid-sized companies with turnovers exceeding the old MSME limits had to function without the advantages that MSMEs receive. However, with the revised thresholds, businesses with a turnover between ₹250 Cr and ₹500 Cr now fall under the MSME umbrella, enabling them to access various benefits and incentives.

Key Implications for Mid-Corporates

1. Access to MSME Benefits

The reclassification provides mid-corporates with numerous financial and operational advantages:

• Easier and cheaper credit: Mid-sized businesses can now benefit from priority sector lending, lower interest rates, and government-backed loan schemes.

• Collateral-free loans: Through the Credit Guarantee Fund Scheme for MSMEs (CGTMSE), businesses can secure loans without pledging assets.

• Government incentives: Businesses can now avail themselves of subsidies for technology upgrades, export promotions, and skill development programs.

Also Read: MSME Advantages and Disadvantages

2. Reduced Regulatory and Compliance Burden

• Relaxed labor and tax norms: MSMEs enjoy simplified GST compliance, lower corporate tax rates, and fewer regulatory constraints.

• Faster payments: Under the MSME Samadhan Scheme, businesses classified as MSMEs can enforce strict payment timelines, ensuring that they receive dues within 45 days.

3. Challenges and Considerations

While the new MSME status offers substantial benefits, businesses need to consider a few challenges:

• Public perception shift: Some companies may be hesitant to adopt the MSME classification due to concerns about how larger clients perceive them. A mid-sized firm positioning itself as an MSME may face questions about its credibility in high-value contracts.

• Potential exit from large corporate schemes: Companies that previously operated under large corporate financing structures might need to renegotiate banking and investment terms based on their new MSME status.

• Funding structure adjustments: Businesses that previously relied on corporate bonds or commercial paper issuances may need to transition to MSME-focused lending instruments, which could impact their financial strategy.

Opportunity or Setback?

For mid-corporates, the MSME reclassification presents a strategic opportunity to enhance financial access, reduce compliance burdens, and leverage government incentives. The ability to secure low-cost funding, enforce timely payments, and benefit from regulatory relief can significantly improve cash flow and support business growth.

However, companies must conduct a thorough evaluation before adopting the MSME classification. The shift may require adjustments in financing strategies, branding approaches, and contractual dealings with larger partners.

Also Read: MSME Loan

Conclusion

The inclusion of mid-corporates in the MSME category can be a game-changer for many businesses, providing them with financial relief and operational advantages. Whether this move benefits your business depends on how you align your strategy with the new classification.