Discuss about MSME sector in India

1. INTRODUCTION TO SMALL BUSINESS
FIELD STUDY PROGRAM

2. COURSE LEARNING OUTCOMES
 Analyze the importance of small business in their
own community and in the Indian economy
 Evaluate current business issues and trends and
their effect on local business opportunities
 Analyze entrepreneurial opportunities and the
processes involved in creating an entrepreneurial
venture
 Assess the role that problem solving and creativity
play in the success of an entrepreneurial venture
 Describe the characteristics and skills needed to
succeed in an entrepreneurial venture

3.  Explain the relationship between effective financial
management and profit
 Demonstrate the use of appropriate communication
techniques for business activity
 Analyze the nature and importance of effective
leadership in a small business environment
 Analyze the mechanics and processes of group
dynamics
 Demonstrate an understanding of the laws and
regulations that govern working conditions

4. IMPORTANCE OF SMALL BUSINESS IN
COMMUNITY
 Micro, Small and Medium Enterprises (MSME) are
the backbone of the socio-economic development
of our country.
 It also accounts for 45 % of total industrial
production, 40% of total exports and contributes
very significantly to the GDP.
 Manufacturing segment within the MSME
contributes to 7.09% of GDP.
 MSMEs also contribute to 30.50% of services.
 The total contribution of MSMEs to the GDP is
37.54.

5.  Employment Generation
 Regional development
 Export promotion
 Diversification
 Support for large industries

6. PROBLEMS FACED BY SMALL BUSINESS
 Difficult access to finance
 Lack of credit history
 Inadequate collateral
 High interest rates
 Lack of awareness about government schemes

7.  Lack of skilled workforce
 Competition
 Access to technology
 Lack of infrastructure
 Lack of marketing and promotional support

8. MICRO, SMALL AND MEDIUM ENTERPRISES
DEVELOPMENT (MSMED)ACT, 2006
The MSMED Act, 2006, was enacted to provide
 Enabling policy environment for promotion and
development of the sector by way of defining
MSMEs
 Putting in place a framework for developing and
enhancing competitiveness of the MSME
enterprises
 Ensuring flow of credit to the sector and paving the
way for preference in Government procurement to
products and services of the MSEs
 Address the issue of delayed payments etc.

9. EARLIER CLASSIFICATION
Category Manufacturing Service
Micro <25 L <10 L
Small 25L-5C 10L-2C
Medium 5C-10C 2C-5C

10.  MSMEs are managed under the Ministry of MSME.
 Earlier, MSMEs were categorised based on the amount
invested in plant and machinery/equipment.
 After 14 years since the MSME Development Act came
into existence in 2006, a revision in MSME definition was
announced in the Atamnirbhar Bharat package on 13th
May, 2020.
 Revised regulations came effective from 1st July 2020.

11. CHANGES
 Annual turnover has also been added as a
criteria.
 Investment and turnover limit has increased for
MSME.
 No difference in limit between manufacturing and
service sectors.

12. MANUFACTURING & SERVICE ENTERPRISE

13. COMPARISON
Category Manufacturing Service
Micro <25 L <10 L
Small 25L-5C 10L-2C
Medium 5C-10C 2C-5C

14.  The aim of the revised MSME classification was to
help businesses avail various government benefits
and access multiple government schemes.
 However, not all businesses are considered as
MSMEs.

15. WHY REGISTER AS MSME??

16. BENEFITS:
 Collateral free cheaper bank loans
 Benefits in tax rebates
 Industrial promotion subsidy
 Protection against delayed payments – MSME Act 2006
(45-day credit period)
 Helps innovators - Govt. financing of 70-80% of the project
cost
 Many government tenders - open only to the MSMEs.
 Higher preference for government license and certification
 Subsidy on patent registration
 ISO Certification reimbursement

17. LIST OF MSME BUSINESSES
 Placement and Management Consultancy Services.
 Training and Educational Institute.
 Energy Efficient Pumps.
 Xeroxing.
 Beauty Parlour and crèches.
 Auto repair services, and garages.
 X-Ray Clinics.
 Tailoring.
 Equipment Rental & Leasing.

18.  Photographic lab.
 Servicing of Agricultural Farm Equipment.
 Back Office Operation Relating to Computerised
Data.
 STD/ISD booths.
 Retail Trade with low Capital.
 Multi Channels Dish cable T.V. with Dish Antenna.
 Laundry and Dry Cleaning.
 Toughened Metallic Ware.
 Automotive Electronic Component products.
 Electronic Surveillance and Security.
 Mechanical Engineering Excluding Transport
Equipment.

19.  Engineering and Fabrication.
 Recorders, VCRs, Radios, Transformer, Motors,
Watches.
 Micronutrients For Plants.
 Active Pharmaceutical Ingredients and Ayurvedic
Products.
 Khadi Products and Hosiery Products.
 Handicraft activities like Spinning, Weaving, Artisans.
 Printing and other products made of paper.
 Coir Industry.
 Furniture and wood products.
 Poultry Farm.
 Bicycle parts.
 Stationery Items.

20.  Call centre.
 IT Solution Provider.
 Testing Labs for industries.
 Auto Parts Components.
 Ceramics and glass products include roofing tiles,
glass flooring tiles, granite, etc.
 Rubber Products.
 Leather products.
 Moulding – This includes products like combs,
umbrella frames, plastic toys, etc

21.  On 2 July 2021, Union Minister, Nitin Gadkari,
through an amendment announcement-
revised the definition for MSME
Under the new definition, both wholesalers and
retailers are brought in under the classification of
MSMEs.

22.  All medical services, including those provided by
clinics, hospitals, and nursing homes, are eligible
for MSME registration

23. INDUSTRIES NOT COVERED
 Gambling and betting activities
 Forestry and logging
 Fishing and aquaculture
 Trade/repair of motorcycles (wholesale and retail)
 Retail trade except of vehicles and motor cycles
 Activities of households for domestic personnel
 Goods and services produced via private
households for personal use
 Activities of extraterritorial organization and bodies

24.  Certain activities like craft hunting and animal production
are also not included
Except for:
 Production of eggs.
 Operation of poultry hatcheries.
 Beekeeping and production of honey and beeswax.
 Raising of silkworms, production of silkworm cocoons.
 Operation of Agricultural irrigation equipment.
 Support activities for animal production.
 Preparation of crops of primary markets.
 Cotton ginning, cleaning, ginning.
 Preparation of tobacco leaves.
 Other post-harvest crop activities.
 Seed processing for propagation.

25. WHY CERTAIN BUSINESSES ARE NOT COVERED IN
THE MSME LIST?
The Government notification,June 2017
 But the trading companies are a link between a
manufacturer and a customer.
 That is why it does not come under this scheme
 But a trader who creates different products/ additional
service included
 For example, if the trader sells a brand’s TV and also
offers repair services for it. He can get registered under
MSME business as a service provider

26. REGISTER
 Offline
 Online - https://udyogaadhaar.gov.in/.

27. UDYAM REGISTRATION/ MSME CERTIFICATE
 Business aadhar license which has a unique
identification number issued to micro, small, and
medium enterprises (MSMEs) in India.
 It serves as proof of the MSME’s existence and
eligibility for various government schemes,
subsidies, and benefits.
 The certificate facilitates access to credit, promotes
competitiveness, and encourages the growth of
MSMEs in the country.

28.  Udyam Registration certificate remains valid for a
lifetime but it is essential to keep the information
updated regularly.

29. REGISTRATION PROCESS
 https://www.youtube.com/watch?v=jcsMV-B20cA

30. NIC CODE
 National Industrial Classification Code (NIC) is a
statistical standard for developing and maintaining
a comparable data base for various economic
activities.
 Used to analyse as to how each economic activity
is contributing towards national wealth.
 Classify and identify businesses according to their
business activities.

31.  It is an unique 5-digit code assigned to each business
activity.
 The 5-digit NIC code represents the sector and sub-
sector of the business activity.

32.  Application:
1. MSME registration
2. Company/LLP registration