UPSC Prelims Practice Questions — MICRO, SMALL, AND MEDIUM ENTERPRISES FORM THE BACKBONE OF INDIA’S INDUSTRIAL ECONOMY: ECONOMIC SURVEY 2025-26

Q1. Under the revised MSME classification effective 1 July 2020, what is the highest annual turnover limit up to which an enterprise can still be classified within the MSME sector?

  • A. ₹50 crore
  • B. ₹100 crore
  • C. ₹250 crore
  • D. ₹500 crore

Q2. The revised classification of MSMEs based on composite investment-and-turnover criteria (effective 1 July 2020), which removed the earlier distinction between manufacturing and service enterprises, was notified by which of the following?

  • A. Ministry of Micro, Small and Medium Enterprises
  • B. Ministry of Finance
  • C. Ministry of Commerce and Industry
  • D. NITI Aayog

Q3. According to the Economic Survey 2025-26, approximately how many enterprises constitute India's MSME sector?

  • A. 3.28 crore
  • B. 7.47 crore
  • C. 32.82 crore
  • D. 11.10 crore

Q4. With reference to the contribution of MSMEs as reported in the Economic Survey 2025-26, consider the following: 1. MSMEs contribute about 31.1% of India's GDP. 2. MSMEs account for about 35.4% of manufacturing. 3. MSMEs contribute about 48.58% of India's exports. 4. MSMEs account for about 60% of India's total employment. Which of the statements given above is/are correct?

  1. MSMEs contribute about 31.1% of India's GDP.
  2. MSMEs account for about 35.4% of manufacturing.
  3. MSMEs contribute about 48.58% of India's exports.
  4. MSMEs account for about 60% of India's total employment.
  • A. 1, 2 and 3
  • B. 1 and 2 only
  • C. 2, 3 and 4
  • D. 1, 3 and 4

Q5. Under the MSMED Act, 2006, within how many days of acceptance of goods or services is a buyer statutorily required to make payment to a micro or small enterprise?

  • A. 30 days
  • B. 45 days
  • C. 60 days
  • D. 90 days

Q6. Under the MSMED Act, 2006, what is the primary function of the Micro and Small Enterprises Facilitation Council (MSEFC)?

  • A. Adjudicating and resolving disputes relating to delayed payments to micro and small enterprises
  • B. Registering enterprises and issuing Udyam Registration numbers
  • C. Providing collateral-free credit guarantees for MSME loans
  • D. Notifying the investment-and-turnover thresholds for MSME classification

Q7. The Self-Reliant India (SRI) Fund is best described as which one of the following?

  • A. A fund-of-funds providing equity/quasi-equity infusion into MSMEs through a mother-fund–daughter-fund structure
  • B. A collateral-free credit guarantee scheme covering MSME term loans
  • C. A priority-sector lending refinance window operated by the RBI
  • D. A direct cash-grant scheme for first-generation MSME entrepreneurs

Q8. With reference to the Self-Reliant India (SRI) Fund, consider the following: 1. It aims to infuse ₹50,000 crore of equity funding into MSMEs. 2. Of its corpus, ₹10,000 crore is contributed by the Government of India. 3. It extends collateral-free loans of up to ₹2 crore to individual micro enterprises. 4. As of November 2025, it had supported 682 MSMEs with investments worth ₹15,442 crore. Which of the statements given above is/are correct?

  1. It aims to infuse ₹50,000 crore of equity funding into MSMEs.
  2. Of its corpus, ₹10,000 crore is contributed by the Government of India.
  3. It extends collateral-free loans of up to ₹2 crore to individual micro enterprises.
  4. As of November 2025, it had supported 682 MSMEs with investments worth ₹15,442 crore.
  • A. 1, 2 and 4
  • B. 1, 3 and 4
  • C. 2, 3 and 4
  • D. 1 and 3 only

Q9. The Udyam Registration process for MSMEs replaced the earlier Udyog Aadhaar Memorandum (UAM) with effect from which date?

  • A. 1 July 2020
  • B. 1 April 2020
  • C. 2 October 2019
  • D. 1 July 2021

Q10. In the Udyam Registration process, on what basis are an enterprise's investment and turnover figures primarily determined?

  • A. Self-declaration, with data auto-fetched/linked from the Income Tax Department and GSTN
  • B. Physical verification and certification by a District Industries Centre officer
  • C. Audited financial statements uploaded with the application
  • D. A creditworthiness certificate issued by the enterprise's lending bank

Q11. With reference to the role of MSMEs as reported in the Economic Survey 2025-26, consider the following: 1. MSMEs are the second-largest employer in India after agriculture. 2. The sector employs over 32.82 crore persons. 3. MSME credit growth was a key driver of industrial credit growth in H1FY26. 4. MSMEs are the single largest employer in India, ahead of agriculture. Which of the statements given above is/are NOT correct?

  1. MSMEs are the second-largest employer in India after agriculture.
  2. The sector employs over 32.82 crore persons.
  3. MSME credit growth was a key driver of industrial credit growth in H1FY26.
  4. MSMEs are the single largest employer in India, ahead of agriculture.
  • A. 1 only
  • B. 4 only
  • C. 1 and 4
  • D. 2 and 3

Q12. MSME development schemes advancing the Atmanirbhar Bharat and Viksit Bharat@2047 goals are implemented by the Ministry of MSME; however, the Economic Survey 2025-26 that designated MSMEs as the backbone of India's industrial economy was tabled in Parliament by which ministry?

  • A. Ministry of Finance
  • B. Ministry of Micro, Small and Medium Enterprises
  • C. Ministry of Commerce and Industry
  • D. Ministry of Corporate Affairs