SUSTAINABLITY AND SUCCESS OF MSME IN INDIA

1. ANVESAK
ISSN : 0378 – 4568 UGC Care Group 1 Journal
Vol. 51, No.1(IV) January – June 2021 180
SUSTAINABLITY AND SUCCESS OF MSME IN INDIA
Dr.G.SRIVIDHYA
Assistant Professor of Commerce, Shri Shankarlal Sundarbai Shasun Jain College for women,
T.Nagar, Chennai
ABSTRACT
Themicro, small and medium Enterprises (MSMEs) are the growth accelerators of the Indian
economy and for promoting equitable development. The MSME contributes about 30% of the
country’s gross domestic product (GDP). In terms of exports, they are an integral part of the supply
chain and contribute about 40% of the overall exports.Micro Small and Medium Enterprises
(MSME) sector has emerged as a highly vibrant and dynamic sector of the Indian economy over the
last five decades. MSMEs not only play crucial role in providing large employment opportunities at
comparatively lower capital cost than large industries but also help in industrialization of rural &
backward areas, thereby, reducing regional imbalances, assuring more equitable distribution of
national income and wealth. MSMEs are complementary to large industries as ancillary units and
this sector contributes enormously to the socio-economic development of the country. The study aims
to analyse the sustainability and success of MSME in India.
Keywords: Sustainable, MSMES, Employment, Technology
Introduction:
Micro, Small and Medium Enterprises (MSME) are the backbone of the socio-economic
development of our country. MSMEs continue to lead the country towards economic growth, the
Government of India has from time to time announced various schemes to support the development
of this sector.
Micro-, small and medium sized enterprises are vital in achieving the Sustainable
Development Goals. Efforts to enhance access to finance for SMEs across key sectors of national
economies are an important element of implementation of the Sustainable Development
Goals (SDGs).
Recently, in view of the economic hardship caused by covid 19, the government has
announced few schemes under ‘Aatmanirbhar Bharat’ i.e. Self-reliant India initiative. Accordingly,
the criterion for classifying MSME has also been revised.
Under the revised criterion, the combined factors of ‘Investment in plant and machinery’ and
‘Turnover’ are required to be considered to determine whether a business should be classified as a
micro, small or a medium enterprise. In contrast, earlier the classification of an MSME unit was
based only its investment in plant and machinery; and also depending on whether the enterprise was
in the manufacturing sector or in the services sector.
Definitions of Micro, Small & Medium Enterprises
In accordance with the provision of Micro, Small & Medium Enterprises Development
(MSMED) Act, 2006 the Micro, Small and Medium Enterprises (MSME) are classified as below:
Manufacturing Sector
Enterprise Category Investment in Plant & Machinery
Micro Enterprises Does not exceed twenty five lakh rupees
Small enterprises More than twenty five lakh rupees but does not exceed five core
rupees
Medium Enterprises More than five crore rupees but does not exceed ten crore rupees
Service Sector
Micro Enterprises Does not exceed ten lakh rupees
Small enterprises More than ten lakh rupees but does not exceed two core rupees
Medium Enterprises More than two crore rupees but does not exceed five crore rupees

2. ANVESAK
ISSN : 0378 – 4568 UGC Care Group 1 Journal
Vol. 51, No.1(IV) January – June 2021 181
Review of Literature
Paramasivan. C &Mari Selvam. P (2013) Micro, Small and medium enterprises are the
back bone of the economic development ofthe country, which concentrates to meet the local as well
as the global demands in a uniquecharacters of the products and services. In India, these sectors
performed well and spread allover the country according to the availability of resources and
traditional methods. MSMenterprises performing in a constant manner even in the globalisation era
with the competitiveadvantages. These sectors could able to achieve the sustainable development of
the countrywith self-reliance aspects. Hence this paper concludes that the progress and performance
of theMSME is a significant manner during the study period.
SubsinaSyal (2015) has concluded that the MSME sector of India is the gateway of global on
the strength of competitive and factors like export promotion, reservation policy, tooling &
technology, manpower training, technology and managerial skills gave enormous opportunities for
growth and better performance in the economy. He also pointed out the facilitation from the
government is required to minimize the transaction costs of technology upgradation, market
penetration, modernisation of infrastructure etc.
Parthajeet Das (2017)has observed that MSMEsover the years have assumed greater
significance in our burgeoning national economy by contributing to employment generation and rural
industrialization. This sector possesses enough potential and possibilities to pushbutton accelerated
industrial growth in our developing economy and well poised to support national programme like
‘Make in India’.This sector has exhibited enough resilience to sustain itself on the strength of our
traditional skills and expertise and by infusion of new technologies, capital and innovative marketing
strategies. Appropriate strategies should be evolved for creation of an enabling ecosystem where
these enterprises are able to access the benefits meant for themselves under a formal and friendly
ecosystem and are further capable of meeting the emerging challenges of a globally competitive
order.
Sonia Mukherjee (2018) has suggested that more efforts in the form of higher investment in
advanced technology and research and development, higher usage of digital and technology enabled
platform, transfer of technology, more investment in human resources, improved access to finance,
reduced infrastructural gaps, lesser stringent business regulations can help in improving the
competitiveness of the MSMEs.The Indian MSME sector needs more information, orientation and
facilities for protecting their intellectual powers and show a positive approach towards creation,
protection and management of IPR to compete in the global market and experience a business
growth.
Rashesh Shah (2020) pointed out that MSMEs are the backbone of a resilient national
economy. Prioritising their development is critical to the future of the country. The government has
come out with a variety of enabling mechanisms over the last few yearsand need more such
measures, especially in the current environment. The next decade will be the metamorphosis of India
from an emerging power to an established economic powerhouse and MSMEs will be an important
cog in the wheel on this journey.
Shreeharipaliath (2020) suggested that in the aftermath of the Covid-19 epidemic, India
now faces the crises of unemployment and business closure, particularly in the micro, small and
medium enterprise, or MSME, sector. The MSME sector must be strengthened by Identifying micro,
small and medium enterprises and their workers; Developing a vulnerability assessment framework
of MSME sectors;Increasing the capacity of the Samadhaan system to expeditiously clear
government dues; Improving the creditworthiness of small businesses.
Objectives of the Study
o To know the Performance of MSMEs from 2015-2016 to 2019-2020.
o To give suggestions for feature growth of MSMEs in India.

3. ANVESAK
ISSN : 0378 – 4568 UGC Care Group 1 Journal
Vol. 51, No.1(IV) January – June 2021 182
Research Methodology
The study is based on quantitative in nature using secondary data. The secondary data were
collected from Annual Report of MSME from 2013-2018.
Limitations of the Study
The study is based on secondary data and it consists of limited parameters. The study period
covers 5 years from 2013-2018.
Analysis & Interpretation
Table 1
Status of MSME Units, Employment and Investments in India
S.No Year Total working Enterprises
(in lakh)
Employment
(in lakh)
Investment
(Crore)
1. 2013-2014 488.46 1,114.29 1,363,700.54
2. 2014-2015 510.57 11,731.32 1,471,912.94
3. 2015-2016 453.63 1,901.42 763,847.80
4. 2016-2017 361.76 1,370.24 947,693.00
5. 2017-2018 633.88 1,109.89 1,014,761.10
Average 489.66 17,227.16 55,61,915.38
Source: MSME Annual report 2013-2018
From the above table shows that the average growth rate of Total Working Enterprises is
489.66, Employment 17,227.16 and Investment is 55,61,915.38 from 2013-2014 to 2017-2018.
Table 2
Share of MSME exports in Total Exports
S.No Year % Share in Export
1. 2013-2014 42.38
2. 2014-2015 44.76
3. 2015-2016 50
4. 2016-2017 50
5. 2017-2018 49
Source: MSME Annual report 2013-2018
From the above table shows share of MSME exports in total exports in the year 2013-2014,
42.38% and it has been increased to 49% in the year 2017-2018.
Table 3
Share of MSME Sector in GVA
Year % share in GVA
2013-2014 32.26
2014-2015 31.86
2015-2016 31.60
2016-2017 31.80
2017-2018 32.00
Source: MSME Annual report 2013-2018
From the above table, it is observed that share of MSME sector in GVA in the year 2013-
2014, 32.26% and it has been slightly decreased to 32.00% in the year 2017-2018. GVA is important
because it is used to adjust GDP, which is a key indicator of the state of a nation's total economy.

4. ANVESAK
ISSN : 0378 – 4568 UGC Care Group 1 Journal
Vol. 51, No.1(IV) January – June 2021 183
Table 4
Share of MSME Sector in Total GDP
Year % share in GDP
2013-2014 29.76
2014-2015 29.39
2015-2016 28.77
2016-2017 29.20
2017-2018 28.90
Source: MSME Annual report 2013-2018
From the above table, it is observed that share of MSME sector in total GDP in the
year 2013-2014, 29.76% and it has been decreased to 28.90% in the year 2017-2018.
Findings
 The average growth rate of Total Working Enterprises is 489.66, Employment 17,227.16 and
Investment is 55,61,915.38 from 2013-2014 to 2017-2018.
 Share of MSME exports in total exports has been increased from 42.38% to 49% from the
year 2013-2014 to 2017-2018.
 Share of MSME sector in GVA in the year 2013-2014, 32.26% and it has been slightly
decreased to 32.00% in the year 2017-2018.
 Contribution of MSME sector in total GDP in the year 2013-2014, 29.76% and it has been
decreased to 28.90% in the year 2017-2018.
Suggestions
 The government can play a crucial role in creating domestic manufacturing capabilities by
leveraging proposed public procurement and projects.
 Efforts should be made to develop self-sufficient clusters of manufacturing competence, with
Cluster Administrative Authorities, empowered to provide single window clearances to
entrepreneurs and investors.
 Disruptive technology, while leading to job losses in traditional areas, also presents new job
opportunities.
 India has already taken several steps, due to which ease of doing business in India has
improved significantly (India’s ranking in ease of doing business report has improved from
142 in 2014 to 63 in 2020).
 However, still some reforms are needed in regard, especially in the field of land, labour
reforms and in enforcing contracts.
 With the advancement of technology and the up-gradation of small business keeping in mind
the future of the Indian Economy.
 Government has taken many new initiatives and make policies for the development of
MSMEs with sustainability.
Conclusion
The significance of the MSMEs sector can be noted from the fact that it is the second-largest
employment provider, after agriculture in India. In India, at present, there are nearly 56 million such
enterprises in various industries, employing close to 124 million people. In order to revive the Indian
economy amid Covid-19 Pandamic, the government has announced an economic package under
Aatmanirbhar Bharat Abhiyan. Like other sectors of the Indian economy, MSMEs have been hit
badly due to lockdown imposed by the government to tackle Covid-19 pandemic. In such a situation,
providing merely a stimulus package may not be effective, until adequate reforms are carried out to
solve its pressing problems and to utilize its potential.

5. ANVESAK
ISSN : 0378 – 4568 UGC Care Group 1 Journal
Vol. 51, No.1(IV) January – June 2021 184
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