Can MSMEs Be Startups? Understanding the Overlap in India

Can MSMEs Be Startups


Many entrepreneurs conflate the concepts of MSMEs and startups. While both are crucial to India’s economic growth, there are distinctions between them.  This article clarifies whether MSMEs can also obtain startup recognition and the implications of doing so.

MSMEs – A Focus on Size and Sector

Micro, Small, and Medium Enterprises (MSMEs) are classified mainly based on their investment in plant and machinery/equipment and annual turnover. These businesses can operate in a wide array of sectors – manufacturing, services, and trade.

Startups – Innovation and Scalability

Startups, on the other hand, are defined by their focus on innovation, disruptive ideas, and the potential for rapid, scalable growth. Technology-driven startups attract significant attention but innovation can exist in any sector.

Can an MSME Be a Startup?

The answer is YES! An MSME that exhibits the characteristics of a startup – innovative product or service, a new business model, and the potential to scale – can be recognized as a startup by the Department for Promotion of Industry and Internal Trade (DPIIT).

Benefits of Startup Recognition for MSMEs

  • Access to Startup India Programs: Eligible MSMEs can avail of benefits like incubation support, mentorship, and funding schemes designed for startups.
  • Tax Incentives: Startups recognized by DPIIT are eligible for income tax exemptions for up to 3 years.
  • Regulatory Simplifications: Recognized startups enjoy certain exemptions and faster compliance processes.

Udyamita Helpline – Your Guide to Dual Recognition

At Udyamita Helpline, we help you navigate both MSME registration and the startup recognition process. Our experts assess if your business qualifies for both and streamline your applications.


Registering as an MSME offers a range of benefits. For MSMEs that are also innovative and growth-focused, obtaining startup recognition unlocks additional funding, support, and incentives designed to accelerate their trajectory.

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