The Full form of SME is Small and Medium Enterprises. They are also known as small and medium-sized businesses (SMBs) or Small and Medium Enterprises (SMEs). The SMEs have a certain number of employees and the investment in the assets such as plant and machinery cost falls within a certain level of amount. Small and Medium Enterprises play a very important role in the growth and development of any country’s industrial economy. It also helps in motivating people to drive competition and innovation in many economic sectors.
The turnover and workforce of SMEs vary according to the different countries. In India, under section 7 of the MSMED (Micro, Small and Medium Enterprises Development) Act 2006, the government specifies the size of micro, small and medium enterprises. In Micro Enterprises, the investment in the plant and machinery should not exceed 25 lakh rupees. In Small Enterprises, the investment in the plant and machinery can be more than 25 lakh rupees but does not exceed 5 crore rupees and in Medium Enterprises, the investment in the plant and machinery is more than 5 crore rupees but does not exceed 10 crore rupees.