MSME (Micro, Small, and Medium Enterprise) term was introduced by the Government of India in

agreement with the Micro, Small & Medium Enterprises Development (MSMED) Act, 2006. MSME is
initiated and managed under the Ministry of MSME (MoMSME) are entities engaged in the
production, manufacturing, processing, or preservation of goods and commodities.

MSME sector is considered the backbone of the Indian economy and contributes nearly accounts for
27% of the country’s GDP. It primarily works for the development of people from backward and rural
areas. As per the official data as of 31st April 2022, there are presently more than 6.33 crore
MSMEs that employ approx. 11.10 people across the nation.

To know more regarding MSMEs in India, let’s discuss their basics, such as classifications, loan
schemes, role, and importance in the socio-economic development of India.

New MSME Classification

The distinction between the manufacturing and services enterprises has been removed by making
the investment amount and annual turnover similar for enterprises engaged in both sectors.

MSME – Merged Criteria: Investment and Annual Turnover

Sector/Enterprise
Micro-Enterprise Small Enterprise Medium Enterprise
Type

Investment less than Investment less Investment is less

Manufacturing & Rs. 1 crore than Rs. 10 crore than Rs. 50 crore
Services Sector, Both Turnover less than Rs. 5 Turnover up to Rs. 50 Turnover up to Rs. 250
crore crore crore

MSME schemes offered by financial institutions and initiated by the Indian Government are
mentioned below:

 CGTMSE: Credit Guarantee Fund Trust for Micro and Small Enterprises

 CLCSS: Credit Linked Capital Subsidy Scheme
 Credit Guarantee Scheme
 MUDRA Yojana under PMMY
 National Small Industries Corporation (NSIC) Subsidy
 PMEGP: The Prime Minister Employment Generation Programme
 PMRY: Prime Minister’s Rozgar Yojana
 PSB Loans in 59 minutes
 Standup India
  Startup India

Features of the Ministry of MSME (MoMSME)

 Works for the welfare of artisans and workers
 Provides credit limit or funding support from banks
 Promotes entrepreneurship development and skill up-gradation via specialized training
centers
 Supports technology up-gradation, infrastructural development, and modernization
 Offers assistance for improved access to domestic and export markets
 Provides modern testing facilities and quality certification
 Supports packaging, product development, and design intervention

Key entities that work under the MoMSME:

 A Scheme for Promotion of Innovation, Rural Industries, and Entrepreneurship (ASPIRE)

 Khadi and Village Industries Commission (KVIC)
 Mahatma Gandhi Institute for Rural Industrialization (MGIRI)
 National Institute for Micro, Small, and Medium Enterprises (NIMSME)
 National Small Industries Corporation (NSIC)
 Scheme of Fund for Regeneration of Traditional Industries (SFURTI)

Opportunities in MSMEs
The opportunities in the MSME industry are massive due to the succeeding factors:

 Export Promotion and potential for Indian products

 Funding – Finance & Subsidies
 Government’s Promotion and Support
 Growth in demand in the domestic market
 Less Capital required
 Manpower Training
 Project Profiles
 Raw Material and Machinery Procurement
 Tooling & Testing support and much more
Role of MSMEs in the Indian Economy

In 1961, with the merger of the Ministry of Small Scale Industries and the Ministry of Agro and Rural
Industries; the Ministry of Micro, Small, and Medium Enterprises (M/o MSME) was formed.

MSMEs produce and manufacture a wide variety of products for domestic, as well as international
markets. MSMEs help in the promotion of growth and development of Khadi, Village, and Coir
Industries, in cooperation with concerned ministries, state governments, and stakeholders.