Small

&
Medium
Enterprises
Contents
 Defination
 Status
 Performance & Contribution
 Products
 Sectors
 Roles
 Challenges
 Problems
 Environment
 Factors
 Exports
 SMEs & Industrial Policy
 Support Agencies
 Conclusion
 Bibliography
Definition of MSMEs in India
Micro, small and medium enterprises as per MSMED Act, 2006
are defined based on their investment in plant and machinery (for
manufacturing enterprise) and on equipments for enterprises providing or
rendering services. The present ceilings on investment for
enterprises to be classified as Micro, small and medium enterprises
are as follows:
Classification Manufacturing Service Enterprises
Enterprises

Micro Rs. 2.5 million / Rs. 25 lakh Rs. 1 million / Rs. 10 lakh
(USD 50,000) (USD 20,000)

Small Rs.50 million / Rs. 5 crore Rs. 20 million / Rs 2 crore

(USD 1 million) (USD 4,00,000 )

Medium Rs 100 million / Rs 10 crore Rs. 50 million / Rs 5 crore

(US$ 2 (US$ 1 million)
million)
Status of SMEs in India

 Number-3.5 Million (80% of total enterprises)

 Contribution to Industrial Output- 50%
 % of Total Exports- 35%
 % of Overall Exports- 45%
 Employment- Around 60 million
 Products- Over 8000 value added products
(Consumer items, capital and intermediate
goods).
Performance & Contribution of
MSMEs
13 Million MSMEs
> 8000 products

45% industrial
production MSMEs 40% Exports

31 Million
Employment
Major Sectors of Indian SMEs
 Agro and Food Processing
 Automobiles
 Building Materials
 Electrical and Electronics
 Engineering
 Furniture and Furnishing
 Gems and Jewelry
 Handicrafts
 Information Technology & IT Enabled Services
 Leather & leather Goods
 Machinery, Equipments and Tools
 Paper, Plastic and Packaging
 Pharmaceuticals and Chemicals
 Textiles and Garments
 Meat products
 Bio-engineering
 Sports goods
Micro, Small and Medium enterprises
development act, 2006
 The act defines enterprises instead of industry.

 Enterprises have been categorized broadly into those engaged in (i)

manufacturing and (ii) providing/rendering of services.

 Both categories have been further classified into micro, small and
medium enterprises, based on their investment in plant and machinery.

 Investment ceiling for mfg. small enterprises raised to Rs. 5 cr.

Roles of SMEs in the Development
of India

 13 Million MSME Units.

 Employ 30 million people.
 Create 1 Million jobs per annum.
 Contribute 34% of Export.
 Contribute 40% of Industrial Output.
 Produce more than 8000 products.
 Industrial Growth Rate 8.10%.
 SME Growth Rate 12.32%
Challenges

 Knowledge Based Economy

 Internet and E-Business
 Demanding Customers
 Industrialization & Competitiveness
 Globalization
 Skilled Manpower
 Increasing Pressures for additional care
Problems to SMEs
 Unavailability of Capital.
 Technological obsolescence.
 Imperfect knowledge of market conditions.
 Inadequate availability of finance and credit.
 Lack of infrastructural facilities.
 Deficient managerial and technical skills.
 Inadequate and irregular supply of raw material.
Environment for the SMEs
Opportunities
Strengths
New EU countries:trade and investment
Stable environment (safety, economy, law)
Brand products
Consumer and commercial demand
Products with application
Technological facilities
Growing consumption of businesses
Tradition of business conduct
and consumers
High level of education
Open resources of workforce

Weaknesses
EU = social and expensive state Threats
Hyper-competitive environment Steady rise of costs
Different territories (culture, history, language) Growing competition from Asia
Low level of mobility of labour Transfer of manufacturing to Asia
Lack of marketing and trade High level of bureaucracy
Factors of Economic Growth of
the SMEs

 People
 Ideas
 Availability
 Money
 Playground
SMEs & Industrial policy

 1956 Policy:
- To create employment opportunities.
- To make available foreign markets for the product of SSI.
- To encourage development of SSI in industrially & economically
backward regions.
- To facilitate infrastructure facilities

 1977 Policy:
- Whatever can be produced by small, cottage industries must
only be so produced.
- Special arrangements for marketing of the products of Small
Scale Sector.
- Special Legislation will be introduced to give due recognition &
adequate protection to the self-employed in cottage &
household industries.
- Special attention to be given to the `Cottage & SI(Tiny Sector)’
Cont..
 1980 Policy:
- To promote village industries.
- To strengthen the existing arrangements of providing finance.
- Maximum time for approval of technology was reduced to 30 days.
- Export of at least 30% of annual production (by the third year).

 1990 Policy:
- Central investment subsidy.
- Higher flow of credit.
- Women entrepreneurs.
- Reduce bureaucratic controls and simplify procedure.
Support Agencies to SSI
 Central Government
- Small Industrial Development Org.
- National Small Industries Corp. Ltd.
- Small Industries Service Institutes
- Small Industrial Development Bank of India

 State Government
- Districts Industries centres
- State Financial Corp.
- State Small Industrial Development Corp.
- Technical Consultancy Org.

 Others
- Industry Associations
- Non-governmental Organizations
The World Bank's Board approved on November 30, 2004 a
loan to the Small Industries Development Bank of India
(SIDBI), backed by a Government of India guarantee. The
loan, which is the first Bank financial sector loan to India
since the early 1990s, finances the India Small and Medium
Enterprises (SME) Financing and Development Project. The
objective of the Project is to improve SME access to finance
and business development services, thereby fostering SME
growth, competitiveness and employment creation, which are
key to achieving the Government of India's overall objectives
of economic growth and poverty reduction.
Conclusion
 SMEs form the backbone of the Indian manufacturing sector and have become
engine of economic growth in India. It is estimated that SMEs account for almost
90% of industrial units in India and 40% of value addition in the manufacturing
sector. This paper closely analyses the growth and development of the Indian
mall scale sector from opening of the economy in 1991. Third part looks into the
present scenario of SMEs and the problems they phases like lending, marketing,
licenseraj issues in detail. The Micro, Small and Medium Enterprises Act, 2006 is
intended to boost the sector. The provisions of the Act are examined closely. The
final part provides some future policy framework for the sustainability of the
sector.

SMEs plays catalytic role in the development of economy.

Backbone of national development and large employment generation.

Vehicle to achieve multi-fold objective.

But, MSME development in india is poorer due to lake of reliable and stable
economic infrastructure, technological obsolescence, inferior quality and low
productivity.
Bibliography
 SMEs – Key Drivers for growth
 Industrial Economy of India
 SMEs in India
 Globalisation & SMEs
 Ministry of Finance
 Economic Survey
 www.planningcommission.nic.in
 www.indiabudget.nic.in
 www.smeindia.com
 www.sidbi.in
 www.worldbank.org
 www.smeworld.org
 www.msme.gov.in
 www.rbi.gov.in
 www.google.com
THANK YOU
FOR YOUR
ATTENTION!