MSME Sector in India - The Engine of Growth - Part - 2

1. The Engine of Growth
MSME Sector in India
Part 2

2. The Engine of Growth
Micro, Small and Medium Enterprises (MSMEs) are a significant contributor to
the economic growth of the country across the realms of production, exports
and employment.
Today, the sector produces a wide range of products, from simple consumer
goods to high- precision, sophisticated finished products. It has emerged as a
major supplier of mass consumption goods as well as a producer of electronic
and electrical equipment and drugs and pharmaceuticals. An impetus to the
sector is likely to have a multiplier impact on economic growth.

3. MSME Definition
Prior to 1991, industries were divided into two blocks, at a very broad level:
large and small. SSIs were defined based on investment in plant and
machinery (excluding land and building) and there were no licensing required
to set-up such a unit.
In 2006, under MSMED Act, a more comprehensive definition based on
capital investment was laid out. The details enumerated below:

4. MSME Definition

5. Key Characteristics
Number of MSMEs –
Ministry of MSME periodically conducts Census to ascertain the size and
status of the industry from time to time. While all registered units form part
of the survey, from the unregistered a representative sample is selected
across geographies and its findings extrapolated for the country. The two sets
together represent the entire MSME sector.

6. Number of MSMEs
Further, this survey has incorporated revisions on coverage and expansion
from time to time. So before MSMED Act 2006, the sector was comprised
only of manufacturing units.
The Act included a small list of industry related and IT services. By the time
results of 4th MSME Census (2006-07) were published, a few very large
sectors were included such as wholesale and retail trade; legal, education and
social services; hotel and restaurants; transports , storage and warehousing
(except cold storage) among others.

7. Number of MSMEs
As per the last Census of 2006-07, there were 361.7 lakh MSME units. The
corresponding figures have been used by the Ministry to project size of the
sector and as per MSME Annual Report for 2013-14;the projected estimate of
the size of number of MSMEs for 2012-13 is 467.6 lakhs.
This has grown at CAGR of 4.4% over a period of 6 years ending 2012-13.The
Annual MSME Report for 2012-13 pegs the composition of the MSME sector
as - Services 68.2% and Manufacturing 31.8%.

8. Number of MSMEs
Exhibit 1: Number of MSMEs (In Lakhs)

9. Employment Generated by MSMEs
Employment Generated by MSMEs –
Similarly, for the Employment figures, The MSME Annual Report for 2013-14
puts the projected estimate of employment at 1061.52 lakh, having grown at
a CAGR of 4.7% over a period of 6 years ending 2012-13.

10. Employment Generated by MSMEs
Exhibit 2: Employment in the MSME Sector (In
Lakhs)

11. Split by Segment : Registered vs Un-
registered
Split by Segment : Registered vs Un-registered –
In terms of the split by registered – unregistered, the fourth (All-India) Census
of MSMEs estimates, that out of the total number of MSMEs, almost 94 % are
still in the unregistered segment.

12. Split by Segment : Registered vs Un-
registered
Exhibit 3: Split by Registered Vs Unregistered

13. THANK YOU
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