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is an MSME? an MSME
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The MSME Industry - India Perspective The MSME Industry - Gujarat Perspective
What is an MSME?
It is governed under the Micro, Small and Medium Enterprises, Development Act, 2006 As per the provisions of this Act,
Enterprises engaged in the manufacture or production of goods pertaining to any industry specified under Schedule I of IDR Act, 1951 are classified as:
- A micro enterprise, where the investment in plant and machinery does not exceed Rs.25 lakhs. A small enterprise, where the investment in plant and machinery is more than Rs.25 lakhs but does not exceed Rs.5 crore
- A medium enterprise, where the investment in plant and machinery is more than Rs.5 crore but does not exceed Rs.10 crore.
What is an MSME?
As per the provisions of the Act mentioned earlier, Enterprises engaged in providing or rendering of services are classified as: - A micro enterprise, where the investment in equipment does not exceed Rs.10 lakhs. A small enterprise, where the investment in equipment is more than Rs.10 lakhs but does not exceed Rs.2 crore A medium enterprise, where the investment in equipment is more than Rs.2 crore but does not exceed Rs.5 crore.
In calculating the investment in P&M, the cost of pollution control, R&D, industrial safety devices and such other items as may be specified by notification, shall be excluded.
Launching an MSME
Any person who intends to establish (a) A micro or small enterprise, or (b) A medium enterprise engaged in providing or rendering services, or (c) A medium enterprise engaged in the manufacture or production of goods, shall at his discretion, file the Entrepreneurship Memorandum of Micro, Small or as the case may be, of Medium enterprise with such authority specified by the state Government. Filing of such Memorandum however is discretionary. It is however advisable to file such a Memorandum.
Launching an MSME
Any person who before the commencement of this Act, established (a) A small scale industry and obtained a registration certificate, or (b) An industry engaged in the manufacture or production of goods having investment in P&M exceeding Rs.1 crore but not more than Rs.10 crore and having filed IEM shall within 180 days from the commencement of this Act file the Entrepreneurship Memorandum. Filing of such Memorandum however is discretionary.
Production of more than 8000 products ranging from handmade stuff to high-tech components and machines
Around 20% of the upper segment of MSMEs is a part of large domestic or global supply chains
MSMEs have been growing at the rate of 35% over the last two years and are now onwards expected to register a 40% growth rate which will be, mainly technology-driven They contribute 45% share to Indias manufacturing output. Share of MSMEs in national exports currently is estimated at around 38%, which is expected to rise to 44% in the next five years.
4.32 3.77
Institutional Support
d) Small Industries Development Bank of India (SIDBI)
SIDBI is a national support institution for small and medium enterprises for their financial requirements and up-gradation.
Incentives to SMEs for setting up new projects, expansion, diversification or modernization. A 5% interest subsidy up to Rs. five lakhs per year for a period of five years
d) Quality certification
Support for BIS certification, ISO 9000, ISO 14000, HACCP, WHO GMP and others Subsidy at 50% cost subject to a maximum of Rs. 2 lakhs
e) Marketing support
Assistance for participation in international trade fairs up to a maximum of Rs. 2 lakhs Assistance to industries associations for participation in international trade fairs up to 50% of total stall rent subject to a maximum Rs. 5 lakhs
Financial Assistance Inadequate access to finance due to lack of information and nonformal business practices. Lack of access to private equity, venture capital and a very limited access to secondary market instruments Credit Issue
The main constraint which the MSMEs still face is the availability and high rate of credit
Delays in Compensation
MSMEs face considerable delays in the settlement of dues/ payment of bills by the large scale buyers
Market Orientation
MSMEs face fragmented markets in respect of their inputs as well as products and are vulnerable to market fluctuations.
The access of MSMEs to technology and products innovations is limited. There is also a lack of awareness of global best practices among MSMEs
Risk capital
Venture capital firms are generally wary of investing in relatively young entrepreneurs or unproven technologies Banks too are hesitant to provide debt financing No formal mechanism for SMEs to raise investment from capital markets
Since SMEs derive significant revenues from exports, the shifts in the exchange rate ratio has eroded into their profits. SMEs lack in-house expertise to analyse hedging options and forecast exchange rate fluctuation
In addition, competition from other south-east Asian countries has forced SMEs to re-architect their business models