law: The Micro, Small and Medium Enterprises Development Act, 2006 
  Chapter III
  
  Classification of Enterprises, Advisory Committee and Memorandum of Micro,
  
  Small and Medium Enterprises
  7. Classification of
  
  enterprises.-
  1.     
  
    Notwithstanding
  
  anything contained in section 11B of the Industries (Development and
  
  Regulation) Act, 1951, the Central Government may, for the purposes of this
  
  Act, by notification and having regard to the provisions of sub-sections (4)
  
  and (5), classify any class or classes of enterprises, whether proprietorship,
  
  Hindu undivided family, association of persons, co-operative society,
  
  partnership firm, company or undertaking, by whatever name called,
  a.      in the case of the
  
  enterprises engaged in the manufacture or production of goods pertaining to any
  
  industry specified in the First Schedule to the Industries (Development and
  
  Regulation) Act, 1951, as
                       
  
   i.        
  
    a
  
  micro enterprise, where the investment in plant and machinery does not exceed
  
  twenty-five lakh rupees;
                      
  
   ii.        
  
    a
  
  small enterprise, where the investment in plant and machinery is more than
  
  twenty-five lakh rupees but does not exceed five crore rupees; or
                     
  
   iii.        
  
    a
  
  medium enterprise, where the investment in plant and machinery is more than
  
  five crore rupees but does not exceed ten crore rupees;
  a.    
  
  
  b.     in the case of the
  
  enterprises engaged in providing or rendering of services, as
               
  
   i.        
  
    a
  
  micro enterprise, where the investment in equipment does not exceed ten lakh
  
  rupees;
  a
  
  small enterprise, where the investment in equipment is more than ten lakh
  
  rupees but does not exceed two crore rupees; or
             
  
   iii.        
  
    a
  
  medium enterprise, where the investment in equipment is more than two crore
  
  rupees but does not exceed five crore rupees. Explanation 1. For the removal of
  
  doubts, it is hereby clarified that in calculating the investment in plant and
  
  machinery, the cost of pollution control, research and development, industrial
  
  safety devices and such other items as may be specified, by notification, shall
  
  be excluded. Explanation 2.It is clarified that the provisions of section 29B
  
  of the Industries (Development and Regulation) Act, 1951, shall be applicable
  
  to the enterprises specified in sub-clauses (i) and (ii) of clause (a) of
  
  sub-section (1) of this section.
  2.     
  
    The
  
  Central Government shall, by notification, constitute an Advisory Committee
  
  consisting of the following members, namely:
  a.      the Secretary to the
  
  Government of India in the Ministry or Department of the Central Government
  
  having administrative control of the small and medium enterprises who shall be
  
  the Chairperson, ex officio;
  b.     not more than five
  
  officers of the Central Government possessing necessary expertise in matters
  
  relating to micro, small and medium enterprises, members, ex officio;
  c.      not more than three
  
  representatives of the State Governments, members, ex officio; and
  d.     one representative
  
  each of the associations of micro, small and medium enterprises, members, ex
  
  officio.
  1.     
  
  
  2.     
  
  
  
  
  3.     
  
    The
  
  Member-Secretary of the Board shall also be the ex officio Member-Secretary of
  
  the Advisory Committee.
  4.     
  
    The
  
  Central Government shall, prior to classifying any class or classes of
  
  enterprises under sub-section (1), obtain the recommendations of the Advisory
  
  Committee.
  5.     
  
    The
  
  Advisory Committee shall examine the matters referred to it by the Board in
  
  connection with any subject referred to in section 5 and furnish its
  
  recommendations to the Board.
  6.     
  
    The
  
  Central Government may also seek the advice of the Advisory Committee on any of
  
  the matters specified in section 9, 10, 11, 12 or 14 of Chapter IV.
  7.     
  
    The
  
  State Government may seek advice of the Advisory Committee on any of the
  
  matters specified in the rules made under section 30.
  8.     
  
    The
  
  Advisory Committee shall, after considering the following matters, communicate
  
  its recommendations or advice to the Central Government or, as the case may be,
  
  State Government or the Board, namely:
  a.      the level of
  
  employment in a class or classes of enterprises;
  b.     the level of
  
  investments in plant and machinery or equipment in a class or classes of
  
  enterprises;
  c.      the need of higher
  
  investment in plant and machinery or equipment for technological upgradation,
  
  employment generation and enhanced competitiveness of the class or classes of
  
  enterprises;
  d.     the possibility of
  
  promoting and diffusing entrepreneurship in a micro, small or medium
  
  enterprises; and
  e.      the international
  
  standards for classification of small and medium enterprises.
  1.     
  
  
  2.     
  
  
  3.     
  
  
  4.     
  
  
  5.     
  
  
  6.     
  
  
  7.     
  
  
  8.     
  
  
  9.     
  
  
  
    Notwithstanding
  
  anything contained in section 11B of the Industries (Development and
  
  Regulation) Act, 1951 and clause (h) of section 2 of the Khadi and Village
  
  Industries Commission Act, 1956, the Central Government may, while classifying
  
  any class or classes of enterprises under sub-section (1), vary, from time to
  
  time, the criterion of investment and also consider criteria or standards in
  
  respect of employment or turnover of the enterprises and include in such
  
  classification the micro or tiny enterprises or the village enterprises, as
  
  part of small enterprises.