Performance analysis of msme with respect to indian
PERFORMANCE ANALYSIS OF MSME
WITH RESPECT TO INDIAN CONTEXT
Small and Medium Enterprises play a vital role for the
growth of Indian economy by contributing
45% of the industrial output,
40% of exports,
42 million in employment, create one million jobs every
year and produces more than 8000 quality products for
the Indian and international markets. As a result, MSMEs
are today exposed to greater opportunities for expansion
and diversification across the sectors.
It contributes near about 17% in the Indian GDP.
The Indian market is growing rapidly and Indian industry
is making remarkable progress in various Industries like
Manufacturing, Precision Engineering, Food Processing,
Pharmaceuticals, Textile & Garments, Retail, IT, Agro and
Service sectors. SMEs are finding increasing
opportunities to enhance their business activities in core
The number of small-scale units has increased from an
estimated 0.87 million units in the year 1980-81 to over
4.53 million in the year 2010.
Definition of MSME in India
Investment in Plant and Machinery
Does not exceed rupees 25 lakh.
More than 25 lakh Rupees but does not exceed 5 crore
More than 5 crore rupees but does not exceed 10 crore
Investment in Equipments
Does not exceed 10 lakh rupees
More than 10 lakh rupees but does not exceed 2 crore
More than 2 crore rupees but does not exceed 5 crore
ABOUT MSMES IN INDIA
Indian MSMEs represent the model of socio-economic
policies of Government, which emphasize job creation at all
levels of income stratum and diffusion of economic power in
the hands of few thereby discouraging monopolistic practices
of production and marketing; and in all prospects contributing
to growth of economy and foreign exchange earning with low
Indian SMEs also play a significant role in Nation
development through high contribution to Domestic
Production, Significant Export Earnings, Low Investment
Requirements, Operational Flexibility, Location Wise Mobility,
Low Intensive Imports, Capacities to Develop Appropriate
Indigenous Technology, Import Substitution, Contribution
towards Defense Production, Technology – Oriented
Industries, Competitiveness in Domestic and Export Markets
thereby generating new entrepreneurs by providing
knowledge and training.
OBJECTIVES OF STUDY
To know the factors affecting growth of MSME.
To examine position of MSME in India.
To find out size of MSME sector of last five years.
To examine the efforts taken by the government for
To know the amount of employment in MSME
Factors affecting growth
Lack of knowledge of foreign markets
SMEs need to compete national and internationally as world is a global
SMEs have in fact helped to earn certain foreign exchange via exports
and for that they have to take proactive view on the prevailing
opportunities and demand in international market.
Proper marketing knowledge and information are two of export problems
which revolve around lack of knowledge of foreign markets, business
practices, competitions and lack of management to generate foreign
Lack of knowledge to locate foreign opportunities and promising markets
is perceived to be a major barrier in exporting of SMEs in developing
countries (Dymsza, 1983; Bodur, 1986; Karafakioglu, 1986; Weaver and
Pak, 1990; Li, 2004).
Furthermore, several publications show that
experienced and inexperienced SME exporters in
developing countries believe that poor knowledge of
potential marketshinders their export activities (Brooks
and Frances, 1991; Kaleka and Katiskeas,
1995; Weaver andPak, 1990; Burgess and Oldenboom,
1997).Information about exporting and more
specifically market information were mentionedas the
most serious problem of manufacturing firms in
developing countries (Weaver and Pak, 1990;Figueiredo
and Almeida, 1988; Brooks and Frances,
1991; Kaleka and Katsikeas, 1995).
Lack of proper Infrastructure:
This includes good means of transport, adequate
electricity, proper location of the SME setup.
These all factors help in reduce cost of procurement of
resources and thus
lowering the production cost for the SMEs. The true
responsibility in fact does rely on government for
better development of infrastructure and amenities in the
Availability of Finance:
To receive timely and adequate finance at the agreeable
conditions is a tedious and cumbersome exercise for
both established as well as budding SMEs. According to
the Indian government survey, 90%of the total Micro units
in India procure funds from friends, lenders and private
The occurrence of financial barriers, such as difficulty in
acquiring the necessary funds to initiate or inance the
project is a prime hurdle. As per Weaver and Pak, 1990;
Kaleka and Katsikeas, 1995; Dicle and Dicle, 1992,
Credit unworthiness and transaction costs are reported
as major factors that reduce access to credit.
Knowledge of Prime technology :
It is indeed the prime most component in competing in
markets as well as the international market.
Though Indian government has set up a technology up
gradation fund to help the SMEs lagging behind.
It is imperative for SMEs to adopt information and
communication technology applications. Lack of IT
Support is big hurdle which hinders the SMEs in
upgrading themselves to complete the global and
It is expensive affair and SMEs are unaware of the latest
soft wares and up gradations .There is also strong
shortage of skilled IT and management personnel who
can help SMEs to tide over problems.
Central and State government policy for the promotion of
Micro and Small Enterprises
The small scale industry sector output contributes almost 40%
of the gross industrial value- added 45 % of the total exports
from India ( direct as well as indirect exports) and is the
second largest employer of human resources after agriculture
the development of small scale sector has . Therefore been
assigned an important role in India’s National Plans.
In order to protect, support and promote small enterprises as
also to help them become self- supporting, a number of
protective and promotional measures have been undertaken
by the government.
THE PROMOTIONAL MEASURES COVER
Industrial extension services.
Institutional support in respect of credit facilities.
Provision of developed sites for construction of sheds.
Provision of training facilities.
Supply of machinery on hire-purchase terms.
Assistance for domestic marketing as well as exports.
Special incentive for setting up enterprises in backward
Technical consultancy and financial assistance for
technological up gradation.
Years All India MSME growth rate (%)
2007-08 to 2008-09 10.76
2008-09 to 2009-10 10.78
2009-10 to 2010-11 10.93
2010-11 to 2011-12 19.06
1. Table Showing All India MSMSE Growth
2007-08 to 2008-09 2008-09 to 2009-10 2009-10 to 2010-11 2010-11 to 2011-12
All India growth rate (%)
All india growth rate (%)
The above diagram shows all India growth of MSME. It
shows that from year 2007-08 to 2008-09.The growth
rate is of 10.76% .while it shows from year 2008-09 to
2009-10 up to 2009-10 to 2010-11The growth rate is
10.78 % and 10.93 %respectively .There is constant
growth in the MSME sector..It shows the highest growth
in the year 2010-11 to 2011-12 of 19.06% which is
highest among the six years. It shows that MSME sector
is growing at faster rate.
2. TABLE SHOWING EMPLOYMENTS IN MSME SECTOR
Years 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
805.23 842.23 881.14 922.19 965.69 1012.59
Table no 1 shows that there is a constant growth of
MSME sector in India.
Table no 2 shows that the MSME provides an large
number of employment opportunity and it growing
Micro, Small and Medium enterprises contribute
significantly to economic growth as increasing exports,
increasing employment. After this study Researcher
found that government has been taken majored decision
for sustain growth in this sector. But major problems are
lack of awareness among the entrepreneurs.
For sustain the growth in this sector government has to
develop the channel of providing facilities so that will
create more opportunities to MSME.