The Micro Small & Medium Enterprises (MSMEs) are defined in India under the MSMED Act 2006 on the basis of capital investment made in plant and machinery, excluding investments in land and building.
Moreover following is the reference chart from where one can determine whether a firm/Company come under the MSME sector or not:
Manufacturing    Sector
Enterprises
Investment in plant & machinery
Micro Enterprises
Does not exceed twenty five lakh rupees
Small Enterprises
More than twenty five lakh rupees but does not exceed five crore rupees
Medium Enterprises
More than five crore rupees but does not exceed ten  crore rupees
Service Sector
Enterprises
Investment in equipment
Micro Enterprises
Does not exceed ten lakh rupees:
Small Enterprises
 More than  ten lakh rupees but does not exceed two crore rupees
Medium Enterprises
 More than two crore rupees but does not exceed five crore rupees
When to apply for MSME?
MSME registration is at the own discretion of the business owner. However, it is advisable to obtain MSME registration right after the incorporation in order to access the subsidies and schemes.
Is MSME Registration Mandatory?
As per the MSMED Act, MSME registration is a voluntary registration. But is advisable to register under MSME Act that provides a host of benefits and access to schemes. The purpose of MSME / UDHYOG AADHAR registration is to avail the benefits and subsidies provided by the government.
“Samadhaan” Portal
The Delayed Payment Portal “Samadhaan” which was set up with the objective to resolve delayed payment issues of MSME has done full justice with the entrepreneurs by serving its purpose. The portal has been set up with an objective of empowering MSMEs across the country to directly register their cases related to delayed payment by Central Ministries and various government departments. 
The buyer is liable to pay compound interest with the monthly rests to the supplier on the amount at the three times of the bank rate notified by RBI in case he does not make payment to the supplier for his supplies of goods or services within 45 days of the acceptance of the goods/service rendered. (Section 16)
Micro, Small and Medium Enterprise Development (MSMED) Act, 2006 contains provisions to deal with cases of delayed payment to Micro and Small Enterprises (MSEs). As per the provisions, the buyer is liable to pay compound interest with monthly rests to the supplier on the amount at three times of the bank rate notified by Reserve Bank in case he does not make payment to the supplier for the supplies of goods or services within 45 days of the day of acceptance of the goods/service or the deemed day of acceptance.
Benefits of getting Registered
All banks and other financial institutions recognize MSMEs and have created special schemes for them. This usually includes priority sector lending, which means that the likelihood of your business being sanctioned a loan is high, and lower bank interest rates. There may also be preferential treatment in case of delay in repayment.
All banks and other financial institutions recognize MSMEs and have created special schemes for them. This usually includes priority sector lending, which means that the likelihood of your business being sanctioned a loan is high, and lower bank interest rates. There may also be preferential treatment in case of delay in repayment. The Ministry of Micro, Small and Medium Enterprises, Government of India and Small Industries Development Bank of India (SIDBI), established a Trust named Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to implement the Credit Guarantee Fund Scheme for Micro and Small Enterprises.
In order to enhance the cost-effectiveness and promote clean energy use in manufacturing, the government reimburses project costs towards these goals for MSME sector units and also expenditure incurred for implementation of clean technology, preparation of audit report and subsidies for licensing products according to national and international standards.
Depending on your business, you may enjoy an excise exemption scheme as well as exemption from certain direct taxes in the initial years of your business.
As part of the MSME Market Development Assistance scheme, the Central Government follows a Price and Purchase Preference policy under which more than 358 items are listed for exclusive purchases by Central Government from the medium, micro, and small units only.
Enterprises become eligible to avail benefit of 1% exemption on the interest rate on OD if they have MSME Registration.
Protection can be availed against delayed payment (MSME Samadhaan).
Enterprises that have MSME Registration Certificate can avail Concession on electricity bill by making application to the electricity department along with MSME Registration Certificate.
Reimbursement of ISO Certification expenses can be claimed by making application to respective authority if Enterprises have MSME Registration Certificate.
Since MSMEs is a sector generating employment and giving entrepreneurial ventures a boost, the government also identifies training sectors for MSME and gives capital grants for improvisation of the infrastructure and support for entrepreneurial development.