NEW DELHI: A parliamentary panel has renewed its push for a separate “nano” category for India’s smallest businesses, rejecting the micro, small and medium enterprises (MSME) ministry’s concerns that such a classification would complicate administration and policy.
A Rajya Sabha Standing Committee on Industry has directed the ministry to form a group involving Small Industries Development Bank of India (SIDBI), Reserve Bank of India (RBI), state governments and experts on informal enterprises to work on the new nano-business classification. Mint explains the development
The committee on industry, chaired by lawmaker Tiruchi Siva, first proposed the nano classification in March 2025, in a report on the MSME ministry’s budgetary grants.
“It is recommended that the Government revise the definition of Micro, Small, and Medium enterprises and create a new category –nano with the lowest financial criteria around ₹10 lakh,” the report dated 24 March 2025 said.
“This would ensure that businesses with a turnover above ₹2.5 crore do not deviate from the core purpose of MSMEs—driving employment generation and supporting smaller enterprises.”
The committee says the existing micro category is too broad to distinguish between subsistence-level household businesses and larger micro enterprises. It noted that 99.3% of India’s 92 million MSMEs are micro enterprises, with turnover below ₹10 crore.
The committee said this hampers targeted support for credit, procurement, subsidies and handholding, and pointed at the Kerala government's 2021 nano enterprise classification for household businesses with a turnover of up to ₹10 lakh.
“…the Committee notes that the approach recommended by it has already been operationalised by the Government of Kerala, which has recognised Nano Enterprises as a distinct segment for units with investment up to ₹10 lakh and has introduced targeted schemes such as interest subvention, margin money assistance, and household enterprise promotion to address the specific needs of ultra-small entrepreneurs,” the 6 August report said.
The MSME ministry is of the view that a new category would require new legal definitions, policy changes and an overhaul of existing administrative mechanisms, as per the August 2026 report of the same committee.
“It is highlighted that it would be difficult to establish a clear and stable criteria for nano enterprises w.r.t. turnover, as nano-businesses fluctuate frequently in scale, making classification complex," the Union MSME ministry told the committee, according to the 6 August 2026 report.
"Further, many nano businesses run seasonally, change activities frequently and have no audited turnover. Policy targeting would be difficult in such conditions,” it added.
The ministry also said that adding “nano enterprises” may create duplication across ministries and schemes instead of simplifying governance, and that the MSME ministry’s existing policies such as the PM Vishwakarma and the PM MUDRA scheme already catered to smaller micro enterprises.
The panel said the ministry was taking “refuge in administrative inconvenience”. “The Committee is not satisfied with the reply and notes with concern that the Ministry has taken refuge in administrative inconvenience rather than addressing the substantive developmental concern raised by the Committee,” the 6 August 2026 report said.
The committee has also asked the ministry to form a group on informal enterprises to work on a new nano-business classification.
The state's 2021 policy sought to promote nano and household enterprises through financial assistance. The government defined a nano and household unit as one with fixed capital investment of ₹10 lakh or less, engaged in manufacturing, services or job work, classified under the white or green pollution categories, and having a connected electrical load of 5 HP or less.
