Introduction to MSME

Introduction to MSME

1. Micro Small & Medium Enterprises Subject Expert S. AfrIn Sulthana

2. Introduction to MSME An Enterprises setup on small level required small Investment as compared to large enterprises For Manufacturing Sector enterprise investment in plant & machinery Micro enterprise : up to rs.25 lac Small enterprises : 25 lac-5 crore Medium enterprises : 5crore-10crore For service sector enterprises investment in plant & machinery Micro enterprise : rs.10 lac Small enterprises : 10lac-2 crore Medium enterprises : 2 crore-5 crore.

3. Meaning of MSME According to MSME ACT,2006: Manufacturing enterprises ( investment in plant and machinery) Micro : Up to to rs 25 lakh Small : More than 25 lakh and up to 5 crore Medium: More than 5 crore and up to 10 crore Service enterprises( investment in equipment) Micro : Up to to 10 lakh Small : More than 10 lakh and up to 2 crore Medium : More than 2 crore and up to 5 crore

4. Meaning of MSME MSME ( AMENDMENT) BILL 2015 Manufacturing: M icro : up to 50 lakh Small : more than 50 lakh and up to 10 crore Medium : more than 10 crore and up to 30 crore service Services: Micro : up to 50 lakh Small : more than 20 lakh up to 5 crore Medium : more than 5 crore and up to 15 crore

5. Characteristics Wide spread base Less gestation period E mployment provider Manufacturing engine Less capital oriented These are world famous MSME are largest exporters Skill oriented dynamic sector Complementary to large industries

6. Role and Importance of MSME Employment Equal distribution of wealth Decentralization Less pressure of population on agriculture Increase in production Need less capital Artistic goods Individual taste Complementary to large industries

7. Role and Importance of MSME Role in exports Use of local resources Less in production Increase in investment Increase in gross domestic product (GDP) Infrastructural development Best alternative in case of less capital Industrial peace Encouragement to cooperation

8. IMPORTANCE OF MSME Creates large scale employment Encourages Inclusive Growth Simple Management Structure for Enterprises Cheap Labor and minimum overhead Plays an important role in making “Make in India” possible

9. Problems / challenges faced by MSME Lack of adequate capital Lack of awareness of resources availability Access to modern technology Poor infrastructure Lack of awareness about government schemes   list of products in MSME (schedule 1) 

10. Problems / challenges faced by MSME Finance : The scarcity of capital and inadequate availability of credit facilities are the major causes of this problem. Firstly , adequate funds are not available and secondly, entrepreneurs due to weak economic base, have lower credit worthiness. Neither they are having their own resources nor are others prepared to lend them. Raw Material : availability of inadequate quantity, poor quality and even supply of raw material is not on regular basis. Small scale units are thus forced to purchase the same raw material from the open market at very high prices. Idle Capacity : There is under utilization of installed capacity to the extent of 40 to 50 percent in case of small scale industries. Various causes of this underutilization are shortage of raw material problem associated with funds and even availability of power.

11. Problems / challenges faced by MSME Technology : Moreover , they lack requisite resources to update or modernize their plant and machinery due to obsolete methods of production, they are confronted with the problems of less production in inferior quality and that too at higher cost. Marketing : They are not in a position to get first hand information about the market i.e. about the competition, taste, liking, disliking of the consumers and prevalent fashion. With the result they are not in a position to upgrade their products keeping in mind market requirements . Infrastructure : There is inadequate availability of transportation, communication, power and other facilities in the backward areas . All these factors are going to adversely affect the quantity, quality and production schedule of the enterprises operating in these areas.

12. Problems / challenges faced by MSME Under Utilization of Capacity : Large scale units are working for 24 hours a day i.e. in three shifts of 8 hours each and are thus making best possible use of their machinery and equipment. Various reasons attributed to this gross under- utilization of capacities are problems of finance, raw material, power and underdeveloped markets for their products . Project Planning : These entrepreneurs do not attach much significance to viability studies i.e. both technical and economical and plunge into entrepreneurial activity out of mere enthusiasm and excitement. They do not bother to study the demand aspect, marketing problems, and sources of raw materials and even availability of proper infrastructure before starting their enterprises. Skilled Manpower: A small scale unit located in a remote backward area may not have problem with respect to unskilled workers, but skilled workers are not available there

13. Problems / challenges faced by MSME Managerial Problems : Managerial inadequacies pose another serious problem for small scale units. Modern business demands vision, knowledge, skill, aptitude and whole hearted devotion. Competence of the entrepreneur is vital for the success of any venture. An entrepreneur is a pivot around whom the entire enterprise revolves. Old methods of production High cost of production Competition with large scale industries Limited demand for artistic goods Lack of able entrepreneurs Lack of standardization Industrial sickness

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