MSME

micro small and medium enterprises

1. MSME

2. Introduction Stands for Micro Small and Medium Enterprises. Plays an important role in economic stability. The enterprise is regarded as BACKBONE of industrial development. Contributing mainly 8% in GDP, 40% in Manufacturing output & 45% in Exports. They have emerged as dynamic and vibrant sector of economy.

3. Emergence of MSME Based on Gandhian Model. Encouraged by MSME Act 2006. During pre-liberalization period 1991, India accorded high priority to small and medium enterprises. The scenario for small scale industry changed with industrial policy establishment. Post liberalization era reflected growth of small scale industries and it was almost 3 times of total industrial sector .

4. Industries under MSME Food Processing Agriculture Inputs Chemicals & Pharmaceuticals Engineering Textiles & Garments Meat Products Sports Goods Plastic Products Computer Software

5. MSME in India In Indian context, MSME is defined as It is basically based on investment in plant, machinery and equipments for providing services. Meaning of micro small and Medium Undertakings changed over years with the changing conditions and squeezing issues of the Indian economy. Different organizations, government offices, people had characterized little modern units in various ways.

6. Criteria’s For Manufacturing- Investment not more than 25 Lakhs for micro. Not more than 5 crores for medium. More than 25 lakhs but doesnot exceeds 5 crores . For Service- Less than 10 lakhs for micro. From 10 lakh to 2 crores for small. Between 2 to 5 crores for medium.

7. Leading banks providing loans

8. Contribution & Performance OF MSME’s 45% Industrial Production 10% Exports 31 Million Employment 13 Million MSME’s producing more than 800 products

9. Role & Functions of MSME Advising the Government in policy formulation. Providing techno-economic and managerial consultancies Developing Human Resources Making available economic information services Maintaining a close liaison with the organizations Evolving and coordinating Policies and Programs

10. MSME in India Contribute nearly 45 percent of the manufacturing output and 40 percent of the exports Contribute app. 8 percent of country’s GDP MSME sector provide the largest share of employment Economic independence Growth of small sector plays an important role in maintaining the overall social & cultural structure

11. Expectations Make in India is a challenge as well as opportunity for MSME sector (challenge from foreign players and opportunity as big players will outsource some of the small items/processes to other entities). The contribution of MSME segment to the GDP in some of the economies is in the 25-60 per cent range. With the increase in MSME contribution to the GDP, there is a potential to increase its contribution to employment to over 50 per cent over the next decade.

12. Share of MSME in GDP Employment Generation Country Non MSME (%) MSME (%) Non MSME (%) MSME (%) Argentina 75% 25% 85% 15% Brazil 78% 22% 33% 67% Canada 73% 27% 10% 90% France 42% 58% 37% 63% Germany 46% 54% 38% 62% India 92% 8% 79% 21% Italy 32% 68% 20% 80% Russia 65% 35% 77% 23% Singapore 50% 50% 30% 70% South  Africa 43% 57% 26% 74% Taiwan 15% 85% 22% 78% UK 50% 50% 48% 52% US 52% 48% 47% 53%

13. Product wise MSME share in Exports Commodity %ages in Exports Pearls, gems, jeweler, metals etc. 35% Electrical and electronics equipment 8% Articles of apparels 11% Pharmaceuticals 6% Others 40%

14. Steps taken for revival Credit facility- Reserve Bank of India (RBI) has issued revised master direction for lending to MSME sector on July 21, 2016 and loans to MSME sector are classified as priority sector lending. Technology- Although MSMEs are labor intensive but use of advance technology will increase the productivity. Government has announced setting up new Technology Centre/Tool Rooms for skill training and technical support to the MSMEs. Market- Identifying the buyer to sell the products is one of the biggest challenge because a MSME doesn’t have a credible brand name and at times it has to face bigger rivals in their product segment who have a natural benefit of their scale of operations.

15. Continued.. MSME sector has to reach entrepreneurs & educate them about the opportunities New bankruptcy law allow entrepreneurs to get a fresh start and thereby facilitate restart Import of Chinese goods has become more economical RBI extending loans upto 25 lakhs

16. MSEMED Act 2006 MSMED Act was established to provide for facilitating *the promotion and development* and *enhancing competitiveness* of micro, small & medium enterprises. Became operational on 2 nd October 2016 Prior to 2006 Act - all about small & village industries After 2006 Act - Micro and Small Industries.

17. Salient Features Industries replaced by enterprises. Constitution of MSME board. Simplification of registration procedure. Progressive credit support. Penalty for delayed payments.

18. Objectives Strengthening competition by establishing an appropriate legal and regulatory framework and removing barriers to competition and trade. Facilitating investment and trade by strengthening the framework for marketing assistance or infrastructure facilities and cluster development of enterprises.

19. Challenges to MSME Absence of adequate and timely banking finance. Limited capital and knowledge. Non-availability of suitable technology. Low production capacity. Ineffective marketing strategy. Non availability of skilled labor at affordable cost

20. MSME - Problems faced by finance Root cause for all the other problems faced by the MSME sector. Exhibited rate of interest. Weak credit worthiness of micro and small enterprises in the country. Difficult to take financial assistance from the commercial banks and financial institutions.

21. MSME - Problems faced by Raw Material An absolute scarcity. Poor quality of raw materials. A high cost.

22. MSME - Problems faced by Marketing One of the main problems faced by the micro and small enterprises is in the field of marketing. These units often do not possess any marketing organization. In consequence, their products compare unfavorably with the quality of the products of the large-scale industries. Therefore, they suffer from competitive disadvantages vis à vis large scale units.

23. MSME - Problems faced by SME SME are often confronted with problems that is uncommon to the larger companies and multi-national corporations. Very difficult for SMEs to attract good IT personnel. Lack of Formal Procedure and Discipline. Uneven IT Awareness and Management Skill Lack of Experience of Using Consultants Lack of Human Resources

24. Measures taken by the government National Manufacturing Competitiveness Programme (NMCP) Schemes Under XI Plan Micro & Small Enterprises Cluster Development Programme (MSE-CDP) Credit Linked Capital Subsidy Scheme for Technology Upgradation Credit Guarantee Scheme ISO 9000/ISO 14001 Certification Reimbursement Scheme Scheme of Micro Finance Programme Scheme of National Award

25. Continued… Guidelines of Scheme for Assistance to Training Institutions ( English/ Hindi) Scheme of Fund for Regeneration of Traditional Industries (SFURTI) Rajiv Gandhi Udyami Mitra Yojana (RGUMY) Implemented through NSIC Marketing Assistance Scheme Performance and Credit Rating Scheme

26. Conclusion With this fast growing economy and vast opportunities MSME are about to raise bar and challenges international competition. We hope to see them in a far better position in terms of growth as well as manufacturing excellence. We could expect more schemes from government to make MSME excellent.