Yojana - November 2017 - Micro Small and Medium Enterprises in India

(Article Covered -  Empowering India's MSME sector & Challenges and Opportunities for MSMEs & Promotional avenues for MSMEs)

Definitions of Micro, Small & Medium Enterprises -  In accordance with the provision of Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 the Micro, Small and Medium Enterprises (MSME) are classified in two Classes:

1. Manufacturing Enterprises-The enterprises engaged in the manufacture or production of goods pertaining to any industry specified in the first schedule to the industries (Development and regulation) Act, 1951) or employing plant and machinery in the process of value addition to the final product having a distinct name or character or use. The Manufacturing Enterprises are defined in terms of investment in Plant & Machinery.

2. Service Enterprises:-The enterprises engaged in providing or rendering of services and are defined in terms of investment in equipment..

The limit for investment in plant and machinery / equipment for manufacturing / service enterprises are as under

Role of MSMEs in India

• A major contributor to GDP
• Providing employment opportunities to masses.
• Foster entrepreneurship and growth led by innovation.
• Complements large businesses as ancillary units in fulfilling their business requirements and needs.
• Development and inclusive growth of the country
• As per the data available with Central Statistics Office (CSO), the contribution of Micro, Small and Medium Enterprises (MSME) in the Gross Value Added (GVA) of the country for the year 2015-16 at current prices is 31.60 per cent and the contribution in Gross Domestic Product (GDP) of the country for the year 2015-16 at current price is 28.77 per cent.
• As per Fourth All India Census of MSME, (with base reference year 2006-07, wherein the data was collected till 2009 and results published in 2011-12), as well as data extracted from Economic Census 2005 conducted by Central Statistical Organization the total employment in the MSME sector is 8.05 crore.

Problems being faced by MSMEs

• Timely access to credit
• Infrastructural gaps
• Technological obsolescence
• Sub optimal access to market
• Skilled manpower
• Increasing competition from neighbouring countries like china, Indonesia, Thailand etc.

Initiatives taken by govt

• Financing SME's- challenges like timely access to adequate credit is a priority for micro and small enterprises and remains a challenge in order to this concern, coverage under Credit guarantee fund scheme has been augmented by govt. Also can avail collateral free loans upto 2 crore from earlier limit of 1 crore.
• PM Employment generation programme [PMEGP] .
• Khadi and village industries- these both are the national heritage sectors of India . it provides employment opportunities in rural areas at low per capita investment especially people belonging to weaker sections of society .
• Focus on technology-
1. The government is focusing on high end skilling and technical support through 18 tool rooms and technology development centres across the country .
2. Government also allocated 2200 crore with funding support from world bank.
3. Establish 15 new technology centres under technology centre system project.
4. A credit linked capital subsidy scheme is also operational for upgradation of technology.
5. Also PM also launched the scheme for financial support to MSME in zero defect zero effect [ZED] certification- this is to create awareness amongst MSME about ZED manufacturing and motivate them for assessment of their enterprise for ZED and support them.
• Strengthening infrastructure- govt has adopted a cluster based approach for the development of MSMEs. It infuses a sense of competition amongst the firms present at the cluster level for doing business. Cluster development programme aims at creation of tangible assets like common facility centres getting access to latest tools , technology, designs, testing facilities etc.
• Access to new market- it was proposed that ministries and departments of central govt and central public sector enterprises shall procure 20% of goods and services from micro and small enterprises as a part of public procurement policy .it also encourages MSEs owned by SC and ST entrepreneurs to participate in public procurement market. To achieve and promote entrepreneur culture for SC-ST a national SC-ST Hub [NSSH] has been launched.
• Human capital : MSME holds the key for skilling our workforce especially a time when 65% our population is below the age of 35. Hence government is working towards improving skill levels all across the country thereby impacting productivity of MSMEs

By: Deepak Hooda