This document provides information about Dr. VBS Reddy and his experience in banking and as a visiting faculty member. It then discusses Micro, Small, and Medium Enterprises (MSMEs) in India, including their definition, classification based on investment size, evolution over time, importance to the economy, challenges they face, and government support programs. MSMEs are a major contributor to India's GDP, exports, manufacturing output, and employment. The government has established various schemes and organizations to improve access to finance, technology, skills, infrastructure and markets for MSMEs.

1. Dr VBS REDDY
• MBA, MSc Agricultural Economics,CAIIB,CTM
• Ex Andhra Bank Chief Dealer
• 34 years of Banking Experience
• Joined as a Credit officer –Handled Loans and advances to
Agricultue,Rural Development,SSI,SMEsExports and Imports
• Visiting Faculty – NIBM around 30 Institutions
• Mobile- 8369170484
• Email – vbsreddy7@gmail.com
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2. • Definition of MSMEs
• Evolution
• Importance and Significance of MSMEs
• Challenges before MSMEs
• Needs of SMEs
• Government Initiatives to Support MSMEs
• Institutional Framework For MSMEs
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3. What is the meaning of MSMEs?
Section 7 (1) of the Micro, Small and Medium Enterprises
Development Act, 2006 (‘MSMED Act’), provides the definition of
MSMEs. As per the definition, enterprises engaged in the
manufacturing sector or services sector are classified as MSME
based on their investment in plant and machinery or investment
in equipment respectively.
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4. What is the meaning of ‘enterprise’?
The term “enterprise” has been defined as follows [Section 2(e) of
the MSMED Act]:
“enterprise” means an industrial undertaking or a business
concern or any other establishment, by whatever name called,
engaged in the manufacture or production of goods, in any
manner, pertaining to any industry specified in the First Schedule
to the Industries (Development and Regulation) Act, 1951 (55 of
1951) or engaged in providing or rendering of any service or
services;
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5. MSMEs are classified in two classes
• Manufacturing Enterprises: The enterprises engaged in the manufacture or production of goods
pertaining to any industry specified in the first schedule to the industries (Development and
Regulation Act, 1951) or employing plant and machinery in the process of value addition to the final
product having a distinct name or character or use. Manufacturing Enterprises are defined in terms
of investment in plant & machinery.
• Service Enterprises: The enterprises engaged in providing or rendering of services and are defined in
terms of investment in equipment.
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6. Manufacturing Sector Enterprises
( Investment in Plant and Machinery)
• Micro Enterprises- Does not exceed 25 lakh rupees
• Small Enterprises- More than 25 lakh rupees but does not exceed 5 crore rupees
• Medium Enterprises - More than5crore rupees but does not exceed 10 crore rupee
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7. Service Sector Enterprises
(Investment in Equipment /Machinery)
• Micro Enterprises- Does not exceed10lakh rupees
• Small Enterprises- More than 10 lakh rupees but does not exceed 2 crore rupees
• Medium Enterprises- More than 2 crore rupees but does not exceed 5 crore rupees
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8. Classification Micro Small Medium
Investment Up to Rs. 1 crore
Up to Rs. 10
crores
Up to Rs. 50
crores
Turnover
Up to Rs. 5
crores
Up to Rs. 50
crores
Up to Rs. 250
crores
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9. Evolution of MSMEs
• Originated with the Industrial Revolution in Europe during 18 & 19
Century
• Initially Most firms were small
• With availability of Finance and Capital & Technology- MSMEs
developed
• Assistance of Government in 20 Century –Created more
Entrepreneurs and their evolution
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10. Evolution of MSMEs
• Pre Independence India –No Government Support
• With Independence-Industrial Development &Regulation Act 1951 –
Provided Basic Framework for Industrialization Strategy
• Small Scale Industries –Included in the constitution of India as a State
Subject –MSMEs
• Capital Intensive Heavy Industries –Now Towards MSMEs
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11. Definition of SSIs/MSMEs
• Jun 1955 – Power Unit < 100 Workers
• Mar 1959 - Power Unit < 100 Workers in per shift of Power Unit
• Jan 1960 Capital investment up to 5 lacks –SSI Unit , up to 10 lacks –
Ancillary SSI Unit
• MSMED Act 2006 –Inclusion of Medium Enterprises & Service Sector
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12. MSME - Micro, Small and Medium Enterprises
• Formation
• Micro; Small and Medium Enterprises Development (MSMED) Act was notified in 2006.
• Ministry of Small Scale Industries and the Ministry of Agro and Rural Industries were merged to
form the Ministry of Micro, Small and Medium Enterprises (M/o MSME)
• T
o encourage entrepreneurship, employment and livelihood opportunities and enhance the
competitiveness
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13. MSME - Micro, Small and Medium Enterprises
• Vision
Sustainable development of globally competitive Micro, Small and Medium Enterprises as
an engine of growth for the India Economy.
• Mission
Promote growth and development of Micro, Small and Medium Enterprises, including
Khadi, Village and Coir industries so as to create new enterprises and more employment
opportunities. The long term goal of the Ministry is to enhance manufacturing base in the
country by improving performance of MSMEs through skill and entrepreneurship
development.
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14. Importance of MSMEs
• Contribution 33% of Manufacturing MSMEs in the country’s total GDP
• MSME Sector as of the estimated number of 633.92 lakh enterprises
• 34.8 million establishments (59.48%) were found in rural areas and nearly 23.7 million
establishments (40.52%) were found to be located in urban areas.
• 45% of industrial production
• 30.5% of services sector
• Employing close to 110 million people
• MSME related products in the country exports was 48.56% during 2017- 18
• Important role in making India a manufacturing hub and “Make in India” campaign a
success
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15. Importance of MSMEs
• An Important channel for Economic Development
• An Important channel for Social Participation
• Crucial for Greening of Economic Development
• Essential for Inclusive globalization and Growth
• Generates Employment, Value Addition and Innovation
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16. Importance of MSMEs
• Allows upward movement of Disabled and Disadvantaged people,
Women
• MSMEs are more important in Developing and poor economies
• MSMEs are very dominant in Developed Economies
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17. Estimated Number of MSMEs (Activity Wise)
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18. Distribution of Enterprises Category
Wise(Numbers in lakh)
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19. Percentage Distribution of Enterprises in rural and urban
areas. (Male/ Female ownership category wise)
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20. Percentage distribution of Enterprises by
Male/Female Owners
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21. State-wise Distribution of enterprises
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22. MSME - Micro, Small and Medium Enterprises
Functions
• Facilitation and credit flow to MSMEs
• Improving competitiveness of MSMEs
• Improve manufacturing base through upgradation of technology
• Promotion of MSMEs through cluster bases approach
• Marketing support to MSMEs
• Skill development and entrepreneurship development training
• Creation of new Micro Enterprises through Prime Minister’s Employment Generation Program
(PMEGP)
• Growth and development of Khadi and Village Industries (KVI) sector
• Growth and development of Coir Industry
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23. Micro, Small and Medium Enterprises (MSMEs) have received a lot of
attention from the government in recent times in terms of regulatory
measures, reliefs and benefits. Consequently, the eligibility criteria and
incentives offered to the MSME sector in terms of financing has been
attracting the attention of businesses across the country. Additionally,
with various schemes being introduced for revival and upliftment of
MSMEs, banks and financial institutions have also started focusing on
the MSME segment of borrowers.
This usually-overlooked segment of borrowers is now becoming the
most targeted customer base, however, there are many uncertainties
around the concept of MSME and the benefits associated with MSME
financing.
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24. MSME – Organizational Setup
Two Divisions
• Small & Medium Enterprises (SME) Division
1. Administration, vigilance and administrative supervision
2. Implementation of the schemes
3. Credit Rating and Assistance to Training Institution
4. Performance Monitoring and Evaluation System
• Agro & Rural Industry (ARI) Division
1. Khadi and Village Industries Commission (KVIC),
2. Coir Board
3. Mahatma Gandhi Institute for Rural Industrialization (MGIRI)
4. supervises the implementation of the Prime Minister's Employment
Generation Programme (PMEGP)
• Integrated Finance (IF) Wing
• Data Analytics and T
echnical Coordination (DATC) Wing 24

25. MSME – Organizational Setup
statutory and non-statutory bodies
• Khadi Village Industries Commission (KVIC)
• Coir Board
• National Small Industries Corporation (NSIC)
• National Institute for Micro, Small and Medium Enterprises (NIMSME)
• Mahatma Gandhi Institute for Rural Industrialisation (MGIRI)
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26. Challenges before MSMEs
• Inadequate credit assistance.
• Problem of skilled manpower
• Irregular supply of raw material.
• Absence of organized marketing.
• Lack of machinery and equipment.
• Absence of adequate infrastructure.
• Competition from large-scale units and imported articles.
• Other problems like poor project planning,
• Managerial inadequacies, old and orthodox designs,
• High degree of obsolescence and huge number of bogus concerns etc.
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27. Head Schemes :
• Prime Minister Employment Generation Programme and Other
Credit Support Schemes
• Development of Khadi, Village and Coir Industries
• Technology Upgradation and Quality Certification
• Marketing Promotion Schemes
• Entrepreneurship and skill Development Programme
• Infrastructure Development Programme
• Scheme of Surveys, Studies and Policy Research
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28. Purpose of the schemes
• Adequate flow of credit from financial institutions/banks
• Support for technology upgradation and modernization
• Integrated infrastructural facilities
• Modern testing facilities and quality certification
• Access to modern management practices
• Entrepreneurship development and skill upgradation through appropriate training facilities
• Support for product development, design intervention and packaging
• Welfare of artisans and workers
• Assistance for better access to domestic and export markets
• Cluster-wise measures to promote capacity-building and empowerment of the units and their
collectives
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29. Recent Policy Initiatives.
• Ease of Registration Process of MSMEs- Udya Registration
• Udyam Registration Portal
• Direct Benefit Transfer in the M/o MSME
• Grievance Monitoring
• MSME SAMADHAAN: T
o Address Delayed Payment to MSEs
• Deal with the issues relating to the Delayed Payments to Micro and Small Enterprises
(MSEs) by the buyers to the MSE supplier
• MSME-SAMBANDH
• Public Procurement Policy for Micro and Small Enterprises which mandates 20% of annual
procurement from MSEs including 4% from enterprises owned by SC/ST entrepreneurs by
the Central Ministries / Departments and Central Public Sector Enterprises (CPSEs).
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30. Thank you
Mobile- 8369170484
Email - vbsreddy7@gmail.com
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