Economics Project

Topic: Micro and Small Scale Industries

Acknowledgement
I would like to convey my heart full thanks to Mrs. Shilpa Oza

Economics teacher who always gave valuable suggestions, invaluable

support, encouragement and supervision for completion of my

project.

She helped me to understand and remember important details of

the

project. Her moral support and continuous guidance enabled me to

complete my work successfully.

INTRODUCTION

Essentially the small-scale industries are generally comprised of

those industries which manufacture, produce, and render services
with the help of small machines and less manpower. These
enterprises must fall under the guidelines, set by the government of
India.

The SSIs are the lifeline of the economy, especially in developing

countries like India.
These industries are generally labor-intensive and hence they play an
important role in the crucial sector of the economy both from a
financial and social point of view, as they help with per capita income
and resource utilization in the economy.

In small-scale industries manufacturing industries grow very fast due

to the natural supply of raw materials and huge demand from the
public. In south India, the summit held where KSSIA (Karnataka small
scale industries association) was also present in January 2019 had a
motive to discuss the key issues and find a solution to them at the
same time provide the right environment.

The major small-scale industries in Tamil nadu and small-scale

industries in Kerala are spinning and weaving, coconut oil making,
cashew nut processing clay products, etc. small scale ancillary
industries in Hyderabad have vast employment due to various
multinational companies. Foreign investment is essential as it creates
a huge no. of ancillary small-scale industries and thereby creating
work.Some examples of small-scale industries are Agarbatti making
chalk making Biodiesel production sugar cany manufacturing wood
making Rice mill, potato chips making, toys making, microbrewery,
liquid soap making, honey processing, slippers making, detergent
powder making, fruit juice production plant, spices making and
chocolate making. These are some of the ideas from different
industries and a variety of products. There are many micro and small
scale industries project in india taking place every minute.
.

Objectives of the project

· To understand an increase in employment of Small scale

industries.

· To understand challenges faced by MSME.

· To improve Economic conditions and standard of living of the

people in the country.

· To eradicate unemployment problem from the country.

Micro and Small Scale Industries are those industries in which

the

manufacturing, production and rendering of services are done on

a
small or micro scale. These industries make a one-time
investment in

machinery, plant, and equipment, but it does not exceed Rs.10

corers

and annual turnover does not exceed Rs.50 corers.

Essentially the small scale industries are generally comprised of

those

industries which manufacture, produce and render services with

the

help of small machines and less manpower. These enterprises

must

fall under the guidelines, set by the Government of India.

The small scale industries are the lifeline of the economy,

especially in

developing countries like India. These industries are generally

labor

intensive, and hence they play an important role in the creation of

employment. SSI’s are a crucial sector of the economy both from

a

financial and social point of view, as they help with the per capita

income and resource utilization in the economy.

Examples and Ideas of Small Scale Industries:

· Bakeries

· School stationeries
· Water bottles

· Leather belt

· Small toys

· Paper Bags

· Photography

· Beauty parlors

Characteristics of Small Scale Industries

· Ownership

Small scale industries generally are under single ownership. So it

can

either be a sole proprietorship or sometimes a partnership.

· Management

Generally, both the management and the control is with the

owner/owners. Hence the owner is actively involved in the day-to-

day

activities of the business.

· Labour Intensive

Small scale industries dependence on technology is pretty limited.

Hence they tend to use labour and manpower for their production

activities.

· Flexibility
Small scale industries are more adaptable to their changing
business

environment. So in case of amendments or unexpected

developments, they are flexible enough to adapt and carry on,

unlike

large industries.

· Limited Reach

Small scale industries have a restricted zone of operations. Hence,

they can meet their local and regional demand.

Role in the Indian Economy

· Employment

Small scale industries are a major source of employment for

developing countries like India. Because of the limited technology

and

resource availability, they tend to use labour and manpower for

their

production activities.

· Total Production

These enterprises account for almost 40% of the total production

of

goods and services in India. They are one of the main reasons for
the

growth and strengthening of the economy.

· Make in India

Small scale industries are the best examples for the Make in India

initiative. They focus on the mission to manufacture in India and

sell

the products worldwide. This also helps create more demands

from

all over the world.

· Export contribution

India’s export industry majorly relies on these small industries

for

their growth and development. Nearly half of the goods that are

exported from India are manufactured or produced by these

industries.

· Public Welfare

These industries have an opportunity to earn wealth and create

employment. Small scale industries are also important for the

social
growth and development of our country.

Objectives of Small Scale Industries

The objectives of the small scale industries are:

· To create more employment opportunities.

· To help develop the rural and less developed regions of the

economy.

· To reduce regional imbalances.

· To ensure optimum utilization of unexploited resources of the

country.

· To improve the standard of living of people.

· To ensure equal distribution of income and wealth.

· To solve the unemployment problem.

· To attain self-reliance.

· To adopt the latest technology aimed at producing better quality

products at lower costs.

Registration of Small Scale Industries in India

· Small scale Industries registration is a registration provided by the

Ministry of MSME. A business should obtain SSI registration in order to

be

eligible for a number of schemes, subsidies and other incentives provided

by the Government to such SSI’s. SSI registration can be obtained online

too.

· SSI registration is provided by the Ministry of Micro, Small and Medium

Enterprises through the Directorate of Industries of the State

Government. The main logic behind the SSI registration is to set up new

SSI businesses in India. SSI registration helps the business to be eligible

for a number of subsidies given by the Government. We can also get

SSI/MSME registration online through Udaym Registration. Let’s look at

the process of SSI/MSME registration online:

· Visit the Udaym Registration portal and click on the “For New

Entrepreneurs who are not registered yet as MSME or those with EM-II”.

· Fill in your “Aadhaar Number” and “Name of the Entrepreneur” and

click
on the “Validate and Generate OTP” button.

· You will receive OTP to your mobile number. Enter OPT on the PAN

verification page will open. Enter PAN details and click on the “Validate

PAN” button.

· The Udaym Registration page will open. Fill in all the personal details
and

industry details such as industry name, address, bank account details and

some common information and click on the “Submit and Get Final OTP”

button.

· With this the MSME registration is complete and a message of successful

registration with a reference number will appear. After verification of

registration, the MSME Registration Certificate is issued.

· If a person wants to get registration for more than one industry then also

he/she can opt for an individual SSI registration. The documents required

for the SSI registration are Aadhar number and PAN number. No

registration fees are required for the registration.

Eligibility Criteria for SSI Registration

SSI registration can be obtained for enterprises that are

considered as micro and small enterprise under the MSME

Act,

2006.
A micro enterprise is an enterprise whose investment in
plant,

machinery and equipment does not exceed Rs.1 crore, and

turnover does not exceed Rs.5 crore.

A small enterprise is an enterprise whose investment in

plant,

machinery and equipment does not exce

ed Rs.10 crore, and

turnover does not exceed Rs.50 crore.

BENEFITS OF GETTING Ss1/MSME

REGISTERED IN INDIA
1. Loans without collateral: The government has introduced various
initiatives for MSME/ss1 that allow them to avail credit without collateral.
One of the best MSME registration benefits, the initiative to provide
collateral-free loans is undertaken by G01 (Government of India) SIDBI
(small industries development. Bank of India) and the ministry of micro,
small and medium enterprise under the name the credit guarantee trust
fund scheme. This is by far the best MSME registration benefit for small
business owners.

2. Subsidy on patent Registration & Industrial promotion: Business

enterprises registered under the MSME act are given a hefty subsidy of 50
percent for patent registration. This can be availed by sending an
application to the respective ministry. In addition to this one of the great
MSME, registration benefits are getting a subsidy for industrial promotion
suggested by the government.
3. 3. Overdraft facility along with interest rate exemption: Businesses or
enterprises registered as MSME/ss1 under the MSME act are eligible to
avail of a benefit of 1% on the overdraft as part of the credit guarantee
trust fund scheme. Although this can vary from bank to bank.

4. Concession on electricity: One of the simplest MSME registration

benefits, businesses registered under the MSME act can avail of a
concession on electricity bills. All they have to do is submit the bills along
with an application and a copy of the registered certificate by MSME.

5. Protection against delayed payments: Understanding the ambiguity lying

with business revenues, the government has extended a helping hand by
providing a layer of protection against payments. As of now the ministry of
Micro, small and medium enterprises has given business owners and
enterprises have given business owners and enterprises to collect interest
on payments delayed by the buyer.

6. 6. ISO certification charges Reimbursement: A registered small or

medium enterprise can claim the expenses for reimbursement that were
spent on Iso certification. The MSME industry is growing significantly due
to the constant support from the Indian government. This has further
inspired everyone, especially the youth, to explore their entrepreneurial
side and start their venture. However, in such cases, knowledge regarding
MSME and MSME registration benefits is a must to know.
Employment in Small Scale Industries
As per 4th All India Census of micro, small and medium

enterprises (MSMEs), around 594.61 lakh persons are employed

in theMSME sector, including agro, rural, cottage and small scale

industries. The State-wise details of employment created in rural

non-farm sector under erstwhile Rural Employment Generation

Program (REGP) implemented by the Government from

01.04.1995 to

31.03.2008 through the Khadi and Village Industries Commission

(KVIC) and the present Prime Minister’s Employment

Generation
program (PMEGP) during 2008-09 and 2009-10, are given at
Annex.

There has been overall increase in employment under the khadi

and village industries. Department of Agriculture and

Cooperation,

Ministry of Agriculture has reported that employment in agro

industries is growing with increase in agricultural production,

processing, etc. With mechanization of agriculture and seed

processing / treatment, the agro sector is providing enhanced

employment opportunities as reported by Department of

Agriculture

and Cooperation.

MSME ACT 2006

The Parliament of India has enacted the Micro, Small and
Medium

Enterprises Development Act, 2006. The implications of the

various provisions of the Act need to be studied in the backdrop
of the

general scenario of micro, small and medium enterprises in our

State.

MSME facilitate the promotion and development of and

enhancing

the competitiveness of micro, small and medium, enterprises and

for
matters connected therewith or incidental thereto.

MSMEs promote inclusive growth by providing employment

opportunities in rural areas especially to people belonging to

weaker

sections of the society. For example: Khadi and Village

industries require low per capita investment and employs a large

number of women in rural areas.

Features of MSME
Following are some of the essential elements of MSMEs –1.
MSMEs work for the welfare of the workers and artisans. They

help them by giving employment and by providing loans and

other services.

2. MSMEs provide credit limit or funding support to banks.

3. They promote the development of entrepreneurship as well as

up-gradation of skills by launching specialized training centers

for the same.

4. They support the up-grading of developmental technology,

infrastructure development, and the modernization of the

sector as a whole

5. MSMEs are known to provide reasonable assistance for

improved access to the domestic as well as export markets.

6. They also offer modern testing facilities and quality
certification

services.

7. Following the recent trends, MSMEs now support product

development, design innovation, intervention, and packaging.

Role of MSMEs in Indian Economy

Since its formation, the MSME segment has proven to be a highly dynamic

Indian economy sector. MSMEs produce and manufacture a variety of

productsfor both domestic as well as international markets. They have
helped promote

the growth and development of khadi, village, and coir industries. They
have

collaborated and worked with the concerned ministries, state governments,

and stakeholders towards the upbringing of rural areas.

MSMEs have played an essential role in providing employment

opportunities

in rural areas. They have helped in the industrialization of these areas with
a

low capital cost compared to the large industries. Acting as a

complementary

unit to large sectors, the MSME sector has enormously contributed to its
sociol economic development.

MSMEs also contribute and play an essential role in the country’s

development

in different areas like the requirement of low investment, flexibility in

operations, mobility through the locations, low rate of imports, and a high
contribution to domestic production.

With the capability and capacity to develop appropriate local technology,

provide fierce competition in domestic and international markets,

technology

savvy industries, a contribution towards creating defense materials, and

generating new entrepreneurs by providing knowledge, training, and skill

up

gradation through specialized training centers.

Contribution of MSMEs in Country’s Economy

at Current Price.
As per the latest information received from Ministry of Statistics & Programme
Implementation, the share of MSME Gross Value Added (GVA) in all India Gross Domestic
Product (GDP) and the share of MSME manufacturing GVA in all India Manufacturing GVA
are as follows:

As per the information culled out from the Data Dissemination Portal of Directorate General
of Commercial Intelligence and Statistics (DGCIS), the share of export of MSME specified
products in all India exports are as follows:

As on 06.12.2023, the total employment recorded on the Udyam Registration Portal (since
inception 01.07.2020 to 06.12.2023) is 15.50 crore.
The Expert Committee on Micro, Small and Medium Enterprises, constituted by Reserve
Bank of India in December, 2018 has estimated the overall credit gap in the MSME sector to
be in the range of Rs. 20 to Rs. 25 trillion. The Government has taken various measures
including ongoing schemes to ensure sufficient financial accessibility and seamless credit to
Micro, Small and Medium Enterprises (MSMEs). Some of these include the following:

 Prime Minister’s Employment Generation Programme (PMEGP) which is a major

credit-linked subsidy programme aimed at generating self-employment;

 Pradhan Mantri Mudra Yojna (PMMY) for providing loans up to Rs. 10 lakh, to non-
corporate, non-farm micro/small enterprises;

 Strengthen credit delivery system and to facilitate the flow of credit to the Micro and
Small Enterprise sector without the hassles of collateral and third party guarantee, up
to a maximum of Rs. 5 crore through Credit Guarantee Scheme;

 Rs. 50,000 crore equity infusion through Self Reliant India (SRI) Fund;

 Launch of Udyam Assist Platform on 11.01.2023 to bring Informal Micro Enterprises

(IMEs) under the formal ambit of MSME for availing the benefits under Priority
Sector Lending;

 Inclusion of Retail and Wholesale traders as MSMEs for the purpose of availing
Priority Sector Lending benefits, w.e.f. 02.07. 2021;

 Non-tax benefits extended for 3 years in case of an upward change in status of

MSMEs;

 Trade Receivable Discounting System (TReDS) to facilitate the financing of trade

receivables of MSMEs from corporate and other buyers including government
departments and public-sector undertakings (PSUs) through multiple financiers
electronically:

 Rs. 5 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS), for businesses,
including MSMEs was announced during the COVID-19 pandemic to fulfil the credit
gap in MSMEs. The scheme was in operation till 31.03.2023.

This information was given by the Minister of State for Micro Small and Medium
Enterprises, Shri Bhanu Pratap Singh Verma in a written reply to the Rajya Sabha today.

Importance of MSMEs for the Indian Economy

Across the globe, MSMEs are accepted as a means of economic growth and for
promoting

equitable development. They are known to generate the highest rate of growth in the

economy. MSMEs have driven India to new heights through requirements of low

investment, flexible operations, and the capacity to develop appropriate native

technology.

1. MSMEs employ around 120 million persons, becoming the second-largest

employment generating sector after agriculture.

2. With approximately 45 lac units throughout the country, it contributes about 6.11%

of GDP from manufacturing and 24.63% of the GDP from service activities.

3. MSME ministry targets to increase its contribution towards GDP by up to 50% by

2025 as India moves ahead to become a $5 trillion economy

4. Contributing around 45% of overall Indian exports

5. MSMEs promote all-inclusive growth by providing employment opportunities,

especially to people belonging to weaker sections of the society in rural areas.

6. MSMEs in tier-2 and tier-3 cities help in creating opportunities for people to use

banking services and products, which can amount to the final inclusion of the

contribution of MSMEs for the economy.

7. MSMEs promote innovation by providing an opportunity to budding entrepreneurs

to help them build creative products hey and thereby boost competition in business

and fuel the growth.

The Indian MSME sector provides silent support to the national economy and acts as a

defense against global economic shock and adversities. Hence, we can say that India is

propelling towards a robust global economy through a silent revolution powered by

MSMEs.
Government assistance and initiatives to
MSME
· Scheme 1: Prime Minister Employment Generation Program and Other Credit

Support Schemes

PMEGP scheme aims to generate employment opportunities in both rural and urban
areas for

the MSMEs through setting up of new self-employment projects in the country. This
MSME

scheme is being managed by Khadi and Village Industries Commission (KVIC) at the
national

level and being implemented by State KVIC Directorates, State Khadi and Village
Industries

Boards (KVIBs), District Industries Centers (DICs) and banks at the state and districts
level.

Ministry of MSME and SIDBI has jointly established the Credit Guarantee Fund Trust
for Micro

and Small Enterprises (CGTMSE) to implement Credit Guarantee Scheme for MSMEs.
The

corpus of CGTMSE is contributed by the Government of India and SIDBI.

To facilitate technology to MSEs through institutional finance for induction of well

established and proven technologies in the specific and approved 51

sub-sector/products.

Both up gradation projects (with or without expansion) and new projects are eligible.

· Scheme 2: Development of Khadi, Village and Coir Industries

This MSME scheme is an amalgamation of different MSME schemes implemented by

the

Khadi sector including publicity, marketing, and market promotion and marketing

development assistance.
The main objectives of the SFURTI scheme is to organize traditional industries, provide

sustained employment, enhance marketability, equip traditional artisans and further

boost

the governance cluster systems.

· Scheme 3: Technology up gradation and Quality Certification

The scheme aims at supporting & promoting the Make in India initiative, achieving
Zero

Defect & Zero Effect practices in manufacturing processes and ensure continuous

improvement.

This MSME scheme aims to create new jobs and reduce unemployment, promote

entrepreneurship culture in India, boost economic development, facilitate innovative

business solution for un-met social needs, and promote innovation to further strengthen
the

competitiveness of the MSME sector.

· National Manufacturing Competitiveness program (NMCP)

Credit Linked Capital Subsidy for Technology up gradation

Marketing Support/Assistance to MSMEs (Bar Code)

co

Lean Manufacturing Competitiveness for MSMEs

Design Clinic for Design Expertise to MSMEs

MAJOR CHALLENGES FACED

MSME as a whole has lots of potential for growth, innovation, contribution to the
economy, and further job creation. Unfortunately, these enterprises also face challenges
that keep threatening their survival and restrict their abilit to grow. The key challenges
faced by the sector.

1. Inadequate market access: MSME in India has struggled to have access to wide
markets for various reasons like lack of adequate capital, inadequate use of marketing
tools, and lack of awareness of the larger economic environment. They have not been
able to scale the business for want of access across the domestic and the global market.
The case continues to be so capping the growth potential.

2. Adoption of technology: Technology advancements can make or break their ability to

adopt new technologies can make them more competitive, cost-effective, and accessible
to the market can be easier. But day to day urgencies of these businesses hinder their
long term perspective lack of adoption will make them absolute and existence will be
under threat.
3. Access to credit: Another significant constraint to the growth of MSMEs is the lack of
quality credit infrastructure. Overall credit infrastructure has various Jottlenecks; long
sanction process high rates, collateral requirements delay in disbursements. The
inability to access funds at a good rate and promptly hinders growth.

4. Quality human Resources: One of the perennial issues faced by the MSME is their
inability to attract and devote quality human Resources to the growth agenda. Most of
these MSMEs are often in the stage of frequent fire fighting and shortage of manpower
given that they are so thinly staffed. This makes it very difficult for them to allocate
these resources to work on long and midterm projects.

5. Lack of experience in using external experts a good consultant or a vendor often saves
time and effort. They help by way of bringing expertise and talent. However, most
MSMEs largely depend on the capabilities of the founders of the core team. The
common build or buy dilemma makes them feel it is better to do things hous with their
staff. Many a time house teams may not have the required eams may not have the
required experience and knowledge the time, effort and costs escalate.

6. Over-reliance on existing clients: Some of these companies once having acquired

some large or key clients let the business run on autopilot. This can limit their business
and ability to maximize their potential. This also results in high concentration risk as
overreliance can prove disastrous if the existing clients were to move away. These
businesses should always look to add clients across sizes, geographies, industry
wherever possible.
SHARE OF SMALL ENTERPRISES IN THE
MARKET

MSMEs constitute over 90 percent of total enterprises in most economics and are
credited with generating high rates of employment and account for a major share of
industrial production and exports in India too, MSMEs play a pivotal role in the overall
industrial economy of the country with its agility and dynamism, the sector has shown
admirable innovativeness and adaptability to survive the recent economic

downturn and recession.

Apart from providing support to large industries, MSMEs have played an important
role in the development of states in terms of employment generation. More than 55% of
these enterprises are located in six major states of the country, namely, Utter Pradesh,
Maharashtra, Tamil Na West Bengal, Andhra Pradesh, and Karnataka.

The MSME sector has slowly come into the limelight with increased focus from the
government and other government institutions corporate bodies and banks. Policy-
based changes; investments in the sector; globalization and India's robust economic
growth have opened up several latent business opportunities for this sector.
India also enjoys favorable demographics the working-age population is likely to
witness significant growth this year leading to an increase in employment optimism
level to 77% in 2011 as compared to 47% in 2019.

The survey also reveals that 93% of Indian business owners expected an increase in
revenues in 2010 and about 25% are positive about exports as compared to the global
average of 22%.

With all these developments, there is a huge potential for MSME to enter the
international markets and create an upsurge in the employment opportunities for India
it also provides an opportunity for the sector to go international and market its made in
India brand to explore more opportunities and enhance possibilities globally.

NEWS AND STATISTICS ABOUT

GOVERNMENT BUDGET
Due to the lockdown, the Indian MSME sector suffered the most with its collective
production decreasing by more than 90%. This store comprises around 64 million
enterprises and employs close to 120 million people. It contributes 30% are women-led
enterprises and close to 60% are based in rural areas. Hence its importance to the
Indian economy is quite significant and critical for bridging the growing rural-urban
divide.

To help businesses get back on track, the prime minister of India announced a host of
relief packages to help India become 'Atmanirbhar Bharat, or a self-reliant majority of
the relief packages were targeted toward MSMEs. This was either in the form of
liquidity support loans or equity infusion support to help MSME expand in size and
capacity.

Further, the government also provided them with a level playing field by reserving
government procurement orders of up to Rs200 crores in value and commitment to
clear invoices within

45 days. The pandemic exposed issues with India's fragmented supply chain. As a
response, the government is in the process of setting up an online platform that will
have a robust listing of businesses and provide the means to directly interact and
transact without depending on intermediaries.

Other initiatives like the ONE NATION ONE CARD scheme and the Ajeevika app are
in various stages of implementation. This can help employers tap into the locally
available labor workforce and restart production activities that were hampered due to
the migration of labor to their hometowns. The government procurement of goods and
services.

The MSMEs shares in government procurement of goods and services. The MSMEs
have benefitted with orders worth Rs20,000 crore since the inception of Gem. Along
with the PM's call for a 'self-reliant India, the current face-off between India and China
has led to an increased demand for locally manufactured goods,unleashing new
opportunities for Indian MSMEs. We believe MSME businesses that are willing to
reimagine their businesses and evolve with the changing times will be poised to leapfrog
on the back of this unique opportunity.
IMPACT OF COVID-19 ON MSME.

The coronavirus crisis has spelled crisis across the world as several countries now
focusing on curbing the rapid spread of the virus while dealing with the economic
ramifications. With governments around the world imposing lockdown and social
distancing becoming the new norm, the post-pandemic world will take up a new norm,
the post-pandemic world will make up for a new trading culture. On the home grounds,
the COVID-19 pandemic has battered all sectors of the economy with the micro sma
and medium enterprises (MSMEs) among the worst hit.Considered the growth engine
of the nation, the MSME sector accounts for 33.4% of India's manufacturing output,
employing about 120 million and generating 45% of India's export. However, the
pandemic outbreak and the consequent stoppage of economic activities have triggered
panic across the nation. With business activities facing extinction risks. Although some
business activities in the non- essential category were resumed as the Lockdown
extended, economic activity, except for agriculture and essential activities remains
halted.

The MSME sector, the majority of which relies on

day to day business to stay afloat, continues to

be the most vulnerable owing to the lockdown

and a decrease in demand, according to a survey

covering 5000 MSMEs, conducted by all Indian

manufacturing organizations (AIMO) has

revealed that 71% of the business weren't able to

pay salaries in March.

The survey further revealed that a whopping 43% would shut shop if panic extends
beyond eight weeks it is unfathomable that a vast number of MSMEs will be choked,
perhaps to the point of permanent closure.

SURVIVAL OF MSME SECTOR THROUGH COVID- 19

The MSME sector which forms the backbone of the Indian economy was hit due to the
blows of demonetization and GST implementation. However as the situation began to
show signs of improvement, the pandemic outbreak, and the consequent lockdown
additionally, factors like credit deficit shortage of working capital, and a decrease in
demand for no-essential goods paint a grim picture.

Despite the fact, that the government is taking countermeasures to combat the loss
incurred due to the pandemic MSMEs are struggling for stability as sales and revenue
remain at a halt. per, all CEOS snap polls on the impact of COVID- 19 on the economy
and industry 54% of company heads predict job losses in their respective sectors post
the lock-down whereas 45% foresee 15-30% layoffs.Additionally, 33% of the firms are
expecting a fall in revenue for FY21. For instance, auto manufacturers like Maruti
Suzuki said the production for April was 'zero' whereas, during February the company
produced 1,40,933 cars. This is the plight across the manufacturing industries, including
textiles, and chemicals among others. What makes the situation wors is that with a
decrease in demand and no possible rebound in the future it may get According to
Trans Union civil, MSME loans worth Rs 2.3 lakh crores are at higher risk of becoming
non-performing further, the need for working capital will increase as payment cycles
are likely to be extended, generating cashflow issues. The situation is expected to prevail
even if the government relaxes restrictions.

RECENT DEVELOPMENTS

The number of registered MSMEs in FY20 has increased by 18.49 percent to 23.15 lakh
units from 21.21 lakh in FY19, according to government data. The growth rate,
however, declined from 39.7 percent in the last financial year which had increased from
15.17 lakh MSMEs registered in FY18 the data shared by the MSMEs Minister Nitin
Gadkari in the Rajya Sabha on Monday showed. Overall the number of registered
MSMEs in India in the past five years stood at 90.19 lakh. According to the MSME
Ministry's FY19 annual report, the MSME sector is dominated by micro-
enterprises.India has 6.33 crore MSMEs out of which 6.30 crore-99.4 percent are micro-
enterprises while 0.52 percent-3.31 lakh are medium and 0.007 percent-5,000 are
medium enterprises. While an increase in the registered number of small businesses
would help the government in measuring their contribution to the sector's share in the
country's GDP along with offering various tax investment benefits the current scenario
of coronavirus outbreaks might impact MSMEs hard given the disruption caused in the
supply chain, warehousing, export credit, etc.

Also the government's decision to lockdown 75 districts where coronavirus cases have
been reported might prove to be a double whammy for MSMEs. These districts are
based in Haryana, Himachal Pradesh, J&K, Karnataka, Kerala, Andhra Pradesh,
Delhi, Gujarat, UP, Telangana, Rajasthan, and more.

"The new restrictions on movement within the country will make it even harder. For
sectors heavily dependent on labor for manufacturing production, especially in the
largely unorganized MSME sector In the coming months, these firms are likely to suffer
a dual shock of supply and demand along with constraints of capital as well as labor, "
Pushkar makeover, Co-Founder, Drip Capital told financial express online. The
company offers trade finance to small and medium-sized exporters.

RECENT INITIATIVES BY THE GOVERNMENT

The Government of India has developed key strategies to promote and support the
MSME sector to promote competitiveness this has resulted in a dramatic positive
change in the sector. Key characteristics of Indian MSMEs such a high contribution to
domestic production, significant export earnings, low investment requirements,
operational flexibility, location wise mobility, capacities to develop appropriate
indigenous technology import substitution, contribution towards defense production,
technology-oriented industries, and competitiveness in domestic and export markets
help them top opportunities in various sectors.

Some of the key announcements for MSMEs in the Union Budget, 2010-11 are:

• Allocation for MSMEs to be increased from Rs 1,794 crores to Rs 2,400 crore for the
year 2011

• Corpus for microfinance Development and equity fund to be doubled to Rs 400 crore
for 2011

• Extension of existing interest subvention of 2 percent for one more year for exports
covering handicrafts, carpets, handlooms, and small and medium enterprises

• Limit of turnover for presumptive taxation of small businesses enhanced to Rs 60 lakh

The increase in the extension of existing interest subvention of 2 percent to the small
and medium enterprises is a positive development by setting up a high-level council on
MSME to monitor the implementation of the recommendations of the prime minister's
high-level task force and increase the allocation development of this sector.

Case Study:
Implementation of technology
innovation in MSMEs in India
In the present age of globalization, micro, small and medium

enterprises (MSMEs) are consistently causative to

productivity

growth and, consequently, competitiveness and aggregate

economic growth by providing the training opportunities,

basic

services and are believed to be especially effective job

creators

and enjoy the reputation of being sources of income. But

technological progressions have increased greatly, the

competition impelled by the globalization of the world

economies and even MSMEs are no more protected to the

challenges that the globalization brings about. It is a

remarkable, and in certain instances, a worrying situation

because MSMEs play an important role in most economies,

including in India, in that they comprise the largest business

block and offer the bulk of employment. The purpose of this

paper is to assess the status of problems faced by MSMEs

and
study the technology innovation implementation (TII)

dimensions in the selected small firms in the Northern region

in India.

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• Teachers

• Friends and family

• Books and CBSE guidelines