When it comes?
The Government of India has introduced MSME or Micro, Small, and Medium Enterprises in 2006 under act “Micro, Small and Medium Enterprises Development (MSMED)-2006“.
Definition of MSME?
‘Atma Nirbhar Bharat Abhiyan’ of 2020 has given new definition of MSME.
According to new classification, Micro enterprises are one which has investment upto 1crore and turnover upto 5crores.
Small enterprises are one which has investment upto 10crores and turnover upto 50crores.
Medium enterprises are one which has investment upto 20crores and turnover upto 100crores.
Earlier, MSME’s was classified in two major heads i.e, manufacturing and service sector. But according to new definition, both sectors are merged and now there is single definition and classification.
Due to this change, now 99% of indian businesses fall under MSME’s category.
Coverage:
MSME covers only manufacturing and service industries. Trading companies are not covered under this scheme. Major heads in manufacturing sector includes manufacturing of wearing appreals, manufacturing of spare parts, food beverages, chemical products, metal industries, rubber and plastic products, electronics,etc.
Service sector includes hotels, restaurants, catering services, financial services and many others.
Importance of MSME’s for Indian economy?
▶️ EMPLOYMENT
After agriculture, it is the 2nd largest sector for generating employment. Around 120millions people employed under these businesses. Provides employment to a large number of unskilled and semi skilled peoples.
▶GDP CONTRIBUTION
Manufacturing sector contributes approx 6% and service sector approx 24%. Around 30% of our GDP comes from MSME’s.
▶ CONTRIBUTION IN EXPORT
Around 45% of total exports comes from MSME’s.
▶ PROMOTES INNOVATION
It provides opportunities, encourages entrepreneurs to build creative products.
▶PLAYS IMPORTANT ROLE IN MAKING “MAKE IN INDIA” POSSIBLE.
To make the ‘Make In India’ come true, the government has directed financial institution to lend more credit to MSME sector.
▶SIMPLE MANAGEMENT STRUCTURE.
Within less capital and limited resources, one can establish enterprises.
▶Supports to bigger industries by supplying raw materials and finished components.
EASE OF DOING BUSINESS RANKING
With the development in MSME sector, India’s ranking jumps from 142 to 63 in six years. In 2014 India ranked 142 out of 190 countries. The latest ranking of world bank puts India’s position to 63rd.
Modi govt is mainly working on 5-key aspects for facilitating MSME sector, that is,
(a) access to credit
(b) access to market
(c) technology upgradation
(d) ease of doing business
(e) sense of security for employees.
scheme related to collateral / guarantee-free loans, Interest subvention(relief) scheme, schemes for market support and export promotion, concession in electricity bills, reimbursement of ISO certification charges, etc.
₹3 lakhs crore is reserved for MSME sector in the recent relief package called Aatmnirbhar Bharat package, provided after covid lockdown to boost small and rural economy.
The Government is committed to focus on all the five pillars of Aatmnirbhar Bharat that is:
⚫Economy
⚫Infrastructure
⚫System
⚫Vibrant Demography and
⚫Demand
