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 in two Classes: (a) Manufacturing Enterprises- The enterprises engaged in the manufacture or production of goods pertaining to any industry specified in the first schedule to the industries (Development and regulation) Act, 1951). The Manufacturing Enterprise are defined in terms of investment in Plant & Machinery. (b) Service Enterprises: The enterprises engaged in providing or rendering of services and are defined in terms of investment in equipment. The limit for investment in plant and machinery / equipment for manufacturing / service enterprises, as notified are as under:

Manufacturing Sector

Enterprises
Micro Enterprises Small Enterprises

Investment in plant & machinery Does not exceed twenty five lakh rupees More than twenty five lakh rupees but does not exceed five crore rupees More than five crore rupees but does not exceed ten crore rupees
Service Sector

Medium Enterprises

Enterprises
Micro Enterprises

Investment in equipments Does not exceed ten lakh rupees:

Small Enterprises More than ten lakh rupees but does not exceed two crore rupees Medium More than two crore rupees but does not Enterprises exceed five core rupees INTRODUCTION TO SSI: The SSI (Small Scale Industry) today is immense for the growth of the country. Small scale industries are the industries which are run with the help of hired labour and which also use some simple machine and power. The investment scale in this industry varies from 5 lakhs to 1 crore for the fixed assets. Irrespective to number of workers engaged is called small scale unit. In India these type of industries are promoted to meet with the problems of excess population and unemployment so the government of India promotes entrepreneur to step up small scale

industries by aiding him by giving loans, subsidiaries, land, guidance etc. The strategy adopted by the government is: 1. Public entrepreneurship should remain confirmed only to those industries and sectors where private enterprise, individual or corporate, is generally not attracted, Existing public entrepreneurship be improved through better management and by putting relatively greater emphasis on research and development. 2. All possible efforts be made very seriously (not casually) for the development of an industrial culture. It should be realized that the central core of entrepreneurship is the motive force since by its very nature, entrepreneurship implies positive action and initiative, motivated individuals with the right kind of combination of abilities and attributes can pursuer their goal with unremitting courage and enthusiasm. 3. There is need to develop management education and industrial training. 4. The development of backward regions/areas constitutes a new challenge. Programs for their development be drawn up and should be effectively implemented. 5. Adequate measures are a must for mobilizing and fostering the entrepreneurial talent in the country. In this context, it should be realized that entrepreneurs are not the gift of a particular class. 6. Economic administration by the state should be improved and made more effective so that economic policies may fully achieve their objectives in the overall interest of the economy. 7. Financial institutions should provide adequate and timely credit and technical assistance, especially to the small and medium sized enterprises. The Product Group Matrix
There are about twenty-one major industry groups in the small scale sector. These are listed below : - Food Products - Chemical & Chemical Products - Basic Metal Industries - Metal Products - Electrical Machinery & Parts - Rubber & Plastic Products - Machinery & Parts Except Elecetrical goods - Hosiery & Garments - Wood Products - Non-metallic Mineral Products - Paper Products & Printing - Transport Equipments & Parts - Leather & Leather Products - Miscellaneous Manufacturing Industries - Other Services & Products - Beverages, Tobacco & Tobacco Products - Repair Services - Cotton Textiles - Wool, Silk, Synthetic Fibre Textiles - Jute, Hemp and Mesta Textiles - Other Services

The Small and Medium Industries form the backbone of manufacturing sector not only in this country but even in the developed countries. In India, the small scale sector contributes to 40% of manufacturing. The small industries sector also contributes substantially to the exports. In the past, the Small Scale Sector existed in a relatively sheltered environment. The levels of protection were high, several goods were reserved for production in the Small Scale Sector, special fiscal incentives were extended to the units in the sector and a number of support programmes were also drawn up to ensure the Small Industries survived.

Implementation Status of the Package for Promotion of Micro and Small Enterprises
The small scale industry sector output contributes almost 40% of the gross Industrial value-added 45% of the total exports from India (direct as well as indirect exports) and is the second largest employer of human resources after agriculture. In order to protect, support and promote small enterprises as also to help them become selfsupporting, a number of protective and promotional measures have been undertaken by the Government. The promotional measures cover - industrial extension services - institutional support in respect of credit facilities, - provision of developed sites for construction of sheds, - provision of training facilities, - supply of machinery on hire-purchase terms, - assistance for domestic marketing as well as exports, - special incentive for setting up enterprises in backward areas etc. - technical consultancy & financial assistance for technological upgradation.

Credit Link Capital Subsidy Scheme for Technology Upgradation

The Scheme was launched in October, 2000 and revised w.e.f. 29.09.2005. The revised scheme aims at facilitating Technology Upgradation of Micro and Small Enterprises by providing 15% capital subsidy (12% prior to 2005) on institutional finance availed by them for induction of well established and improved technology in approved sub-sectors. The admissible capital subsidy under the revised scheme is calculated with reference to purchase price of Plant and Machinery. Maximum limit of eligible loan for calculation of subsidy under the revised scheme is also been raised Rs. 40 lakhs to Rs. 100 lakh.

Credit Guarantee Fund Scheme for MICRO AND SMALL ENTERPRISES

Of all the problems faced by the MSEs, non-availability of timely and adequate credit at reasonable interest rate is one of the most important. The problem is more serious for micro enterprises requiring small loans.

Eligible Credit Facility The credit facilities which are eligible to be covered under the scheme are both term loans and working capital facility up to Rs.100 lakh per borrowing unit, extended without any collateral security or third party guarantee, to a new or existing micro and small enterprise. For those units covered under the guarantee scheme, which may become sick owing to factors beyond the control of management, rehabilitation assistance extended by the lender could also be covered under the guarantee scheme. It is noteworthy that if the credit facility exceeds Rs.50 lakh, it may still be covered under the scheme but the guarantee cover will be extended for credit assistance of Rs.50 lakh only. Guarantee Cover The guarantee cover available under the scheme is to the extent of 75 per cent of the sanctioned amount of the credit facility. The extent of guarantee cover is 80 per cent for (i) micro enterprises for loans up to Rs.5 lakh; (ii) MSEs operated and/or owned by women; and (iii) all loans in the North-East Region. Tenure of Guarantee In case of working capital, the guarantee cover is of 5 years or block of 5 years. Operational Highlights of CGTMSE A year-wise growth position is indicated in the table below: Credit Amount Number of Proposals Approved (Rs. in Approved Lakh) 951 2296 4955 6603 9516 16284 27457 30825 606 2952 5867 11760 32677 46191 70453 105584

Period FY 2000-01 FY 2001-02 FY 2002-03 FY 2003-04 FY 2004-05 FY 2005-06 FY 2006-07 FY 2007-08*

Active MLIs 9 16 22 29 32 36 40 47

FY 2008-09* FY 2009-10*

57 85

53708 151387

219940 687511

Strengthening of Data Base- financial assistance for the Secretarial and Advisory/ Extension services
To strengthen the role and increase the efficiency of the associations of Micro and Small Enterprises, financial assistance for the Secretarial and Advisory/extension services to selected associations may be provided up to a maximum of Rs.5 lakh, depending upon the size and reach of the Association. Under the Scheme, the following machinery and equipment needed by the Associations for upgrading their capacity (both qualitatively and quantitatively) to collect and interpret data relating to changes in the market scenario, Sub-Contracting Exchanges, Testing Laboratories, etc. shall be eligible to receive financial assistance :Phase I (a) Computer and its peripherals including software - Rs. 4,00,000/(b) Furniture and Office Equipments, e.g. fax etc. - Rs. 1,50,000/(c) Photocopier Machine and its Accessories - Rs. 2,00,000/Phase II (d) Consumables per annum - Rs. 1,00,000/(e) Training of the staff - Rs. 50,000/(f) Expenses on Travel etc. - Rs. 50,000/(g) Contingent & other office expenses - Rs. 50,000/-----------------Total: Rs.10,00,000/-----------------The Ministry of MSME/Office of DC (MSME) would provide 50% of the cost of modernization of the facilities and equipment and training of personnel, etc remaining 50% of the cost would be borne by the Associations.

Seminars/Symposiums/Workshops
For organizing Seminars/Symposiums/Workshops, maximum of Rs.2 lakh would be provided to National Level MSE Associations and Rs.1 lakh to Regional/State/Local Level MSE Associations. The Associations can avail financial assistance under this component only once in a financial year. While seeking financial assistance, the Association concerned shall indicate the tentative cost for holding the Seminar/Symposium/Workshop along with details of participation expected and deliverables/outcome of the proposed Seminar/Symposium/ Workshop. Further, it shall undertake to meet 50% of the expenses in case of National level Associations and 25% in case of Regional/State/Local level Associations, out of its own resources. On completion of the activity for which financial assistance has been provided, the Association concerned shall give a Utilisation Certificate to the satisfaction of the Government, failing which it would be debarred for receiving any financial support in future. The item wise break up of expenditure admissible for receiving financial assistance under the Scheme is given in Annexure-I and Annexure-II. Annexure-I Seminars/Symposiums/Workshops organised by the National Level Associations

S. No. Eligible Items Scale of Assistance* 1 Venue Charges Actual, subject to a maximum of Rs.2,50,000/2. Transportation Actual, subject to a maximum of Rs.80,000/-

3. Publicity/Advertisement/Catalogues, etc. Actual, subject to a maximum of Rs.50,000/4. Resource Persons Actual, subject to a maximum of Rs.40,000 /5. Independent Evaluator Actual, subject to a maximum of Rs.30,000/-

NOTE: *50% of the cost could be borne by the concerned National Level MSE Associations. The remaining cost of 50%, subject to a ceiling of Rs. two lakh would be met by GOIs assistance.

Annexure-II Seminars/Symposiums/Workshops organised by the State/Regional/Local Level Associations S. No. Eligible Items Scale of Assistance* 1 Venue Charges Actual, subject to a maximum of Rs.1,25,000/2. Transportation Actual, subject to a maximum of Rs.40,000/-

3. Publicity/Advertisement/Catalogues, etc. Actual, subject to a maximum of Rs.25,000/4. Resource Persons Actual, subject to a maximum of Rs.20,000 /5. Independent Evaluator Actual, subject to a maximum of Rs.10,000/-

NOTE: *25% of the cost would be borne by the concerned State/Regional/Local Level Association. The remaining cost of 75%, subject to a ceiling of Rs. one lakh would be met by GOIs assistance.