An Analysis of Micro , Small and Medium Enterprises in India (2)

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ABDUL MOIZZGH-8567 16-ECM-17
AN ANALYSIS OF MICRO, SMALL AND MEDIUM
ENTERPRISES IN INDIA
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CONTENT

• INTRODUCTION

• CLASSIFICATION OF SSI PRIOR TO MSMED ACT 2006

• DEFINITION OF MSMEs

• PRODUCTS

• CONTRIBUTION

• ROLE OF MSME IN EMPLOYMENT

• ECONOMIC GROWTH AND EXPORTS

• MSMEs AND INCLUSIVE GROWTH

• CHALLENGES FOR MSMEs

• GOVERNMENT ROLE

• MAJOR PLANS SCHEMES IMPLEMENTED BY THE
  MINISTRY

• RECENT INITIATIVES

• CONCLUSION

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INTRODUCTION
The SSI or MSMEs Sector is

• Highly Vibrant and Dynamic sector of
• Indian economy

• The engine of economic growth

• Promote equitable economic development

• Complementary to large industries

• Panacea for several economic woes

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CLASSIFICATION OF SSI PRIOR TO MSMED ACT 2006
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Before MSMED Act, 2006 the SSI sector covers
a wide spectrum of industries-

• Small-scale industrial undertakings
• Ancillary industrial undertakings (ANC)
• Export-oriented units (EOUs)
• Tiny Enterprises (TINY)
• Small-scale service enterprises (SSSEs)
• Small-scale service business enterprise (SSBEs)
• Artisans, Village and Cottage Industries
• Women Enterprises

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• The Small Scale industrial sector contributes
  significantly
• to Indias GDP and export earning in addition
  to providing
• employment to millions of people across the
  country.
• In 1977 units having investment of less than lakh
  were
• defined as small scale industries while for
  ancillary units
• the investment limit was 15 lakhs and for
  tiny enterprises
• 1 lakh
• In 1991 the investment limit for SSI rose to 60
  lakh, for
• ancillary units up to 75 lakhs for tiny
  enterprises
• 5 lakhs
• In 2000, it rose to one crore for SSI ancillary
  units 1
• crore for tiny enterprises 25 lakh

Source Wikipedia/SSI India
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MSMED ACT, 2006
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MSMED Act, 2006

• Introduces the concept of enterprise as opposed
  to the earlier concept of industry.

• Classifies MSMEs into
• Enterprises engage in the manufacture or
• production of goods pertaining to any
  industry
• specified into first schedule of industries
  in the
• Development and Regulation Act, 1951

• Enterprises engaged in providing or rendering
  services

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Micro, Small and Medium Enterprises as per
MSMED Act, 2006

• Based on their investment in plant and
  machinery (for manufacturing
• enterprise) and on equipment for enterprises
  providing or rendering
• services.

Classification Manufacturing Enterprises Service Enterprises
Micro Rs. 2.5 million/ Rs. 25 lakh Rs. 1 million/ Rs. 10 lakh
Small Rs. 50 million/ Rs. 5 crore Rs. 20 million/ Rs. 2 crore
Medium Rs. 100 million/ Rs. 10 crore Rs. 50 million/ Rs. 5 crore
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CONTRIBUTION
36 million units
80 million employment
6000 products
MSMEs
45 Manufacturing output
8 GDP
40 Total export
Source Ministry of Micro, Small and Medium
Enterprises
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NUMBER OF ENTERPRISES
Micro 14.05 lakh
Small 0.76 lakh
Medium 0.03 lakh
Source - Final Report Fourth All India Census of
Micro, Small Medium Enterprises
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PRODUCTS
Source - Final Report Fourth All India Census of
Micro, Small Medium Enterprises
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ROLE OF MSME IN EMPLOYMENT
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MSMEs Generates Large-Scale Employment

• Contributes about 70 percent of the net new jobs
• across the globe

• Labour intensity in the MSMEs sector is almost
• 4 times higher than the large enterprises

• Generates highest employment per Capita
• Investment

• Checks rural migration by providing sustainable
• sources of employment

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CONTRIBUTION OF MSMEs IN EMPLOYMENT
Source 1. Fourth All India Census of MSME
2006-07, 2. National Account
Statistics (2014), CSO, MoSPI and 3.
Annual Survey of Industries, CSO, MoSPI.
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ECONOMIC GROWTH AND EXPORTS
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• Sustains economic growth and increase exports

• Non traditional products account for more than
• 95 per cent of the SSI exports

• Traditional MSEs have potential to expand the
• quantum of exports

• Ideal for meeting small orders quantities in
• industries such as readymade garments,
• home furnishing etc

• Promote eco friendly growth, especially in
• difficult terrains and ecologically sensitive
  areas

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CONTRIBUTION OF MSMEs IN GDP AND OUTPUT
Source 1. Fourth All India Census of MSME
2006-07, 2. National Account Statistics (2014),
CSO, MoSPI and 3. Annual Survey of Industries,
CSO, MoSPI.
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ANNUAL GROWTH RATE ON PRECEDING YEARS
Source - Final Report Fourth All India Census of
Micro, Small Medium Enterprises
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MSMEs AND INCLUSIVE GROWTH

• It is the only source of livelihood for many
  families

• Touches the lives of the most marginalized
  section
• of the society such as women, Muslims, SCs
  and
• STs unskilled labour

• Breaks the cycle of poverty and deprivation

• It is dominated by different social group

• Focuses on peoples skill and agency

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MSMEs DIVISION AMONG COMMUNITIES
Source - Final Report Fourth All India Census of
Micro, Small Medium Enterprises
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MSMEs DIVISION AMONG SOCIAL GROUPS
Source - Final Report Fourth All India Census of
Micro, Small Medium Enterprises
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GENDER
RURAL/URBAN
Source - Final Report Fourth All India Census of
Micro, Small Medium Enterprises
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CHALLENGES FOR MSME
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MSMEs faces tough challenges in the period of
Globalization and Liberalization

• Rock-Bottom Prices
• Infrastructural Bottlenecks
• Financial Bottlenecks
• Marketing
• Technological
• Demonetization
• Goods and Service Tax (GST)
• Other Problems

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GOVERNMENT ROLE
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ORGANISATION

• Khadi Village Industries Commission (KVIC)

• Mahatma Gandhi Institute for Rural
  Industrialization (MGIRI)

• Coir Board

• National Small Industries Corporation (NSIC)
  Ltd

• National Institute for Micro, Small and Medium
  Enterprises

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MAJOR PLANS SCHEMES IMPLEMENTED BY THE
MINISTRY
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• Scheme of fund for Regeneration of
  Traditional Industries (SFURTI)

• Prime Minister s Employment Generation
  Programme (PMEGP)

• Marketing Assistance Scheme

• Performance Credit Rating Scheme

• Credit Guarantee Scheme (CGTMSE)

• International Cooperation (IC) Scheme

• Infrastructure Development Program

• Technology Upgradation and Quality Certification

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RECENT INITIATIVES
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• ASPIRE A Scheme for Promoting Innovation and
  Rural Entrepreneurship

• Change of Definition of MSMEs

• Udyog Aadhaar

• Digital Initiatives

• Technology Centre System Programes

• Quality Management System (ISO)

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CONCLUSION
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• Lack of reliable and stable economic
  infrastructure, reduce growth of credit inflow
  and technological obsolescence, together would
  have let to inferior quality and low productivity
  are the major obstacles for small industries in
  India. At the same time government policies
  changes have thrown open new opportunities and
  market for the Indian Small industries.
• Technological up gradation and in-house
  technological innovation and promotion of
  inter-firm linkages needs to be encouraged
  consistently.
• Financial infrastructure needs to be broadened
  and adequate inflow of credit be insured a
  technological vibrant, internationally
  competitive small industry should be encouraged
  to make a sustainable contribution to national
  income, employment and exports.