The research studies the impact of Demonization on Micro, Small and Medium Enterprises (MSMEs) of India by the Indian Government. A descriptive study of research was being done within area of Mumbai City on the outcome of the demonetization. An unexpected decision was taken by Honourable Prime Minister of India Shri. Narendra Modi on 8th November 2016 for demonetisation of Indian Currency Notes of Rs.500 and Rs.1000. This had a huge impact in Micro, Small and Medium Enterprise (MSMEs) sectors of India. Due to the sudden change, there was a huge shortage of legal currency notes at Public & Private Sectors Bank and other Financial Institutions in Mumbai city. As a result, there was shortage in cash transactions. Due to which Micro, Small and Medium Enterprise (MSMEs) suffered with huge losses in Mumbai city. This resulted in the close-down of many small businesses. It had a vast impact on some large businesses as well. On the other note, it was also seen as an appreciable move by our Indian Government for our future well-being on Indian economy. It had definitely affected many shopkeepers and consumers and they started using plastic money or online payment in a long run. The outcome had a great impact on the economy of the country. This research paper also shows, how much problems has been faced during the demonetisation by the Micro, Small and Medium Enterprise (MSMEs) of India.