Entrepreneurial development, The Pros and Cons of MEMs

1. Micro, Small and Medium
Enterprises in India
An overview

2. What they actually are?
• The commonly used criteria at the
international level to define SMEs are
the number of employees, total net
assets, sales and investment level.
• The European Union makes a general
distinction between self-employment,
micro,small and medium sized
businesses based on the following
criteria:

3. And the criteria is-
0
2-9
10-49
50-249
Self-employed
Micro business
Small business
Medium-size
business

4. In the Indian context, micro, small and
medium enterprises are defined as..
•It is based on the investment investment
in plant and machinery (for manufacturing
enterprise) and on equipments for
enterprises providing or rendering
services.

5. Criteria in India-
• Micro enterprise-investment does not
exceed 25 lakh rupees.
• Medium enterprise- more than five
crores but not upto ten crores.
• Small enterprise- more than 25 lakhs
rupees but doe not exceed 5 crores.

6. In case of services-
• a micro enterprise- not upto 10 lakh
rupees.
• a small enterprise- more than 10 lakh
but not upto 2 crore rupees.
• a medium enterprise- more than 2
crores but not upto 5 crores.

7. Importance of the MSME sector
• The contribution of micro, small and medium
enterprises (MSME) sector to
manufacturing output, employment and exports
of the country is quite significant.
• The MSME sector employs about 42 million
persons in over 13 million units throughout
the country.
• There are more than 6000 products, ranging
from traditional to high-tech items, which are
being manufactured by the Indian MSMEs.

8. Specific policy measures initiated for
boosting MSMES-
•Reservation of items for exclusive
manufacturing in small sector.
•Preferential credit support measures.
•Fiscal concessions.
•Infrastructural development like
development of industrial estates,
testing labs, common facility centres.
•Entrepreneurship development

9. PERFORMANCE AND
CONTRIBUTION OF
MSMEs.
13 Million MSMEs
> 8000 products
MSMEs
31 Million
Employment
40% Exports
45% industrial
production

10. Micro, Small and Medium
Enterprises Development Act, 2006
salient features.
1. Industry replaced by enterprise which
include service enterprises also.
3. Constitution of MSME Board. 4.
Simplification of registration
procedure.
• Progressive credit support.
• Penalty for delayed payments.
• Provision for exit policy.
2. Ambit of sector enlarged to cover
medium enterprises.

11. Institutional Support Structure
for MSMEs in India
At Federal Level
At State Level
1. Ministry of MSMEs
2. Small Industries
Development
Organisation
(SIDO)
3. National Small
Industries
Corporation(NSIC)
4. Khadi & Village
Industries
Commission(KVIC)
5. Coir Board
6. Entrepreneurship
Development
Institutions (EDIs)
MSMEs
1. Directorate of
Industries
2. District Industries
Centres
3. State Finance
Corporation
4. State Industrial
Development
Corporation
5. Technical
Consultancy
Organisations
6. Entrepreneurship
Development
Institutions
Others
1.Industry
Associations
2.NGOs
3.Banks/Fina
ncial
Institutions

12. MAJOR SCHEMES
FOR
MSME’s SUPPORT

13. Credit Support
1. Public sector banks advised to double the
flow of credit to MSMEs within 5 years (20%
annual growth)
2. A minimum of 40% of bank credit
earmarked for priority sector lending which
includes loans to MSEs
3. Specialised SME Bank branches in
industrial clusters for smooth flow of credit
to MSMEs
4. One Time Settlement (OTS) scheme for
settling NPAs of MSMEs

14. Technological Support
• Credit Linked Capital Subsidy Scheme
for Technology Upgradation
– Scheme meant to improve quality of
products by technology
upgradation.
Investment upto INR 10
million
(US$ .250,000) eligible for
support with subsidy upto
15% on
investment.
–

15. Contd.
• Testing Centres for Quality Certification
• Tool Rooms and Training Centres for
skill upgradation
• Incentive scheme for obtaining ISO
Certification by MSEs

16. Marketing Assistance and Export
Promotion
1. Support for participation in trade fairs and
exhibitions – national as well as
international.
2. Training programmes on packaging for
exports.
3. Purchase preference in Government
procurement.
4. Market Development Assistance Scheme
for publicity, market studies and adoption of
modern market practices

17. Cluster Development
Programme
• Cluster formation has been considered
important for MSME development. A
cluster may be defined as a local
agglomeration of enterprises (mainly
SMEs, but often also ncluding some
large enterprises), which are producing
and selling a range of relatedand
complementary products and services

18. International Cooperation Programme
•Provides exposure to MSMEs to the
latest technologies, manufacturing
practices prevalent in their fields in
different countries.
•Encourages their participation in
international exhibitions for exports.

19. Factors affecting MSMEs
• Accessing adequate and timely
financing on competitive terms,
particularly longer tenure loans.
• Accessing credit on easy terms has
become difficult in the backdrop of
current global financial crisis which has
held back the growth of SMEs and
impeded overall growth
andDevelopment.

20. Contd.
• factors that include policy,
legal/regulatory framework (in terms of
recovery,bankruptcy and contract
enforcement), institutional weaknesses
(absence ofgood credit appraisal and
risk management/ monitoring tools),
and lack ofreliable credit information on
SMEs

21. Contd.
• It has become difficult for lenders to be able
to assess risk premiums properly,creating
differences in the perceived versus real risk
profiles of SMEs.
Access to skilled manpower, R&D facilities
and marketing channels is limited
• Availability of finance at cheaper rates, skills
about decision-making and good
management and accounting practices, and
access to modern technology.
• Bribery,corruption,red tapism.
•

22. Challenges before MSMEs
• Problem of skilled manpower.
•Inadequate credit assistance.
•Irregular supply of raw material.
•Absence of organised 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.

23. Thank you.
• A presentation
by- Raveena
kaushal
Bba 4th
sem