About MSMEs


Ajit Kumar AJIT KUMARWISDOM IAS, New Delhi.

Indian Small and Medium Enterprises (SME) sector has emerged as a highly vibrant and dynamic sector of the Indian economy over the last five decades. SMEs not only play crucial role in providing large employment opportunities at comparatively lower capital cost than large industries but also help in industrialization of rural areas. SMEs are complementary to large industries as ancillary units and this sector contributes enormously to the socio-economic development of the country. The Sector consisting of 36 million units, as of today, provides employment to over 80 million persons. The Sector through more than 6,000 products contributes about 8% to GDP besides 45% to the total manufacturing output and 40% to the exports from the country. The SME sector has the potential to spread industrial growth across the country and can be a major partner in the process of inclusive growth.
 
SMEs also play a significant role in Nation development through high contribution to Domestic Production, Significant Export Earnings, Low Investment Requirements, Operational Flexibility, Location Wise Mobility, Low Intensive Imports, Capacities to Develop Appropriate Indigenous Technology, Import Substitution, Contribution towards Defence Production, Technology – Oriented Industries, Competitiveness in Domestic and Export Markets thereby generating new entrepreneurs by providing knowledge and training.
 
Despite their high enthusiasm and inherent capabilities to grow, SMEs in India are also facing a number of problems like sub-optimal scale of operation, technological obsolescence, supply chain inefficiencies, increasing domestic & global competition, working capital shortages, not getting trade receivables from large and multinational companies on time, insufficient skilled manpower, change in manufacturing strategies and turbulent and uncertain market scenario. To survive with such issues and compete with large and global enterprises, SMEs need to adopt innovative approaches in their operations. SMEs that are innovative, inventive, international in their business outlook, have a strong technological base, competitive spirit and a willingness to restructure themselves can withstand the present challenges and come out successfully to contribute 22% to GDP. Indian SMEs are always ready to accept and acquire new technologies, new business ideas and automation in industrial and allied sectors.
 
Definition of MSMEs in India 

(As Per Micro, Small & Medium Enterprises Development (MSMED) Act, 2006)
 
Manufacturing Enterprises – Investment in Plant & Machinery
 
Description                                             INR                                      
 
Micro Enterprises                          upto Rs. 25Lakh                                 
 
Small Enterprises               above Rs. 25 Lakh & upto Rs. 5 Crore
 
Medium Enterprises           above Rs. 5 Crore & upto Rs. 10 Crore
 
Service Enterprises – Investment in Equipments
 
Description                                             INR                                      
 
Micro Enterprises                          upto Rs. 10 Lakh                                 
 
Small Enterprises               above Rs. 10 Lakh & upto Rs. 2 Crore
 
Medium Enterprises           above Rs. 2 Crore & upto Rs. 5 Crore
  
Key highlights of the MSME Sector

- MSMEs account for about 45% of India’s manufacturing output.
- MSMEs account for about 40% of India’s total exports.
- The sector is projected to employ about 73 mn people in more than 31 mn units spread across the country.
- MSMEs manufacture more than 6,000 products ranging from traditional to high tech items. 


Wednesday, 06th Apr 2016, 10:33:30 AM

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