What counts as a medium enterprise under MSME rules?
A medium enterprise is the largest MSME band. As of 1 April 2025, that means an investment in plant, machinery or equipment of up to Rs 125 crore and annual turnover of up to Rs 500 crore. Beyond either figure, a business leaves the MSME framework altogether. A Rs 400 crore company may not sound like an MSME, but some companies at that level still run HR with a lean team. That is the part of the market Offrd is built for.
Reaching medium status usually means the business has grown. It also means losing one legal protection that micro and small suppliers keep. The classification tells you very little about whether a business this size still needs software for a lean HR team or has already outgrown it. Those are separate questions.
Why turnover alone cannot answer whether Offrd fits
Offrd's fit question is normally simple: is a company still running HR through one or two generalists rather than a dedicated HR department. At micro and small size, turnover and headcount usually move together closely enough that the turnover band is a decent proxy. Medium breaks that proxy completely. A company can cross into medium on revenue alone, through better margins or one large order, while its headcount and its HR setup have not changed at all.
The classification question and the Offrd question are separate, so we look at them separately below.
The Rs 125 crore and Rs 500 crore limits, and what sits above them
| Category | Investment limit | Annual turnover limit |
|---|---|---|
| Micro | Up to Rs 2.5 crore | Up to Rs 10 crore |
| Small | Up to Rs 25 crore | Up to Rs 100 crore |
| Medium | Up to Rs 125 crore | Up to Rs 500 crore |
Figures per the Reserve Bank of India and the Ministry of Micro, Small and Medium Enterprises. Full detail and sources on the MSME classification overview.
There is no MSME band above medium. A company that crosses Rs 125 crore invested and Rs 500 crore turned over simply stops being an MSME, and with it goes access to every Udyam linked benefit, from priority sector lending to any state incentive tied to the certificate.
The protection you lose at this size
The 45 day rule stops covering you
The MSMED Act's delayed payment chapter defines a covered supplier as a micro or small enterprise. Medium is not in that definition. A registered medium enterprise can still hold Udyam status and the lending benefits that come with it, but it cannot force a slow paying buyer into the 45 day cap or claim the automatic compound interest at three times the bank rate that micro and small suppliers can.
Many medium sized businesses assume MSME status comes with the same protections at every level. It does not. The payment guarantee was built specifically to protect the smaller end of the scale from being squeezed by bigger buyers, and it stops applying the moment you become one of the bigger players yourself.
What a medium enterprise keeps, worth stating plainly since it is easy to overlook after reading about what is lost, is everything tied to the Udyam certificate itself: priority sector lending recognition, collateral free credit access through schemes built around that certificate, and eligibility for the various state and central incentive programs that check for Udyam status before anything else. Losing the payment protection does not mean losing MSME status altogether.
A worked example: crossing from small into medium
Take a hypothetical contract manufacturer that spent several years as a small enterprise, turning over around Rs 90 crore with roughly 180 employees across two factories. A large export order pushes annual turnover past Rs 110 crore the following year. Investment in new machinery to fulfil that order pushes the plant and equipment figure past Rs 25 crore as well. Both changes, together, move the company from small into medium the next time its Udyam figures update.
Its payroll obligations do not change on that day. EPF and ESI were already running for 180 people, and the states it operates in still set their own professional tax and labour welfare fund rules exactly as before. What does change is invisible until the next dispute: if a large retail buyer starts paying invoices at 75 days instead of the agreed 30, the company can no longer point to the MSMED Act's 45 day rule the way it could as a small enterprise. That protection ends when the business moves into the medium band.
If this manufacturer is still running payroll and offer letters through Offrd at 180 employees, nothing forces a change on the day it becomes medium either. The question for Offrd is not the Udyam band. It is whether 180 people is still a lean team or already a department, and that answer comes from the org chart, not the certificate.
Does medium status change EPF, ESI or professional tax?
No, for the same reason it never has. Provident fund switches on at 20 employees and state insurance generally at 10 in most states, both set by headcount and wages, not by your Udyam band. A medium enterprise crossing several hundred employees has usually been fully inside both schemes for years, well before it ever reached this classification.
Professional tax, labour welfare fund and Shops Act registration continue to run state by state as well, and at medium scale that typically means juggling rules across a longer list of states than a small enterprise would. Offrd calculates each of these per employee automatically, which matters more the longer that list of states gets, but it is the same calculation running whether the company is classified small or medium. The software uses headcount and state rules. Your Udyam band does not change those calculations.
Is a medium sized MSME still a fit for Offrd?
Sometimes. It depends much more on headcount than turnover. Offrd is built for companies up to roughly 250 employees, the range where a business still runs HR through a lean team or a single generalist rather than a full HR department with its own systems and headcount. Priced at Rs 50 per active employee a month on the unlimited plan, a 200 person medium enterprise would run Rs 10,000 a month for offer letters, onboarding, payroll and exits handled in one place, a figure worth comparing directly against what a dedicated HRMS contract and a larger HR headcount would cost at the same size.
A good fit
A medium classified company that has crossed into this band mostly on revenue, perhaps a services or manufacturing business with efficient margins, and still employs a few hundred people managed without a dedicated HRMS.
Not the right tool
A medium enterprise with a workforce in the thousands, multiple HR business partners, and an existing HRMS contract. At that size, a larger HRMS is likely to be the better choice.
If you are unsure, look at how HR is actually being run rather than relying on turnover alone. A rough signal worth checking first: does HR sit with one or two generalists handling everything from offer letters to exits, or is there already a dedicated payroll team and a system that tracks approvals across departments. The first pattern tends to fit; the second usually means the switch to a bigger platform has already effectively happened, whatever the org chart says on paper.
Not yet at medium scale? Check the small enterprise and micro enterprise limits under the same rules.
Common questions on the medium enterprise band
What is the investment and turnover limit for a medium enterprise?
Up to Rs 125 crore invested and up to Rs 500 crore turned over a year, effective from 1 April 2025. Beyond that, a business is no longer an MSME.
Does a medium enterprise still get the 45 day payment protection?
No. That protection is defined for micro and small suppliers only under the MSMED Act, and does not extend to medium.
Is Offrd built for a medium enterprise with a thousand employees?
No. Offrd is aimed at companies up to roughly 250 employees. A smaller medium enterprise without a dedicated HRMS is a good fit; a much larger one needs a bigger platform.
Why would a large company still register as an MSME?
Priority sector lending and collateral free credit access are guided by the Udyam certificate, which still carries value even without the payment protection.
Does medium classification change EPF or ESI rules?
No. Both run on headcount, 20 employees for EPF and generally 10 for ESI in most states, exactly as they do at every other MSME band.
What happens administratively when a business moves from small to medium?
Reclassification happens automatically once updated figures are filed, with no fresh application needed. What changes in practice is that the business stops qualifying for the delayed payment protection reserved for micro and small suppliers.
Sources and official references
- Reserve Bank of India, MSME classification and Udyam Registration FAQ: rbi.org.in
- Press Information Bureau, investment and turnover limits raised 2.5x and 2x for all MSME categories: pib.gov.in
- Employees' Provident Fund Organisation, confirming the 20 employee threshold for EPF Act applicability: epfindia.gov.in
- Government of West Bengal, text of the Micro, Small and Medium Enterprises Development Act, 2006, defining a covered supplier under the delayed payment chapter as micro or small: wb.gov.in
Rules and thresholds change with new notifications. Confirm your own classification on the Udyam portal and take a professional view from your chartered accountant before relying on any figure here. Spot something out of date? Tell us at service@offrd.co.
Still lean enough to run HR without an HRMS?
If your headcount is under roughly 250, Offrd handles offer letters, onboarding, payroll with EPF, ESI and state PT, and attendance, without the overhead of a full HR platform.