MICRO ,SMALL & MEDIUM ENTERPRISES

Jagruti Thakur
MBA098
 Micro, Small & Medium Enterprises
(MSME’S)

Definition:-

In Indian context, a small scale enterprise is broadly defined

in terms of the value of investment in plant & machinery. A small
scale enterprise is the one in which the investment in fixed assets
in plant and machinery, is whether held on ownership terms, on
lease, or in hire purchase.
Types Manufacturing Service

Micro Enterprises Rs. 1 Lakh to 25 Rs. 10 Lakhs

Lakhs

Small Enterprises Rs. 25 Lakhs to 5 Rs. 10 Lakhs to Rs. 2

Crores Crores

Medium Enterprises Rs. 5 Crores to 10 Rs. 2 Crores to Rs. 5

Crores Crores
 Production output in
small quantities

Informal management Small no. of workers &

style Employees

Lowest possible capital

Usually present in the investment in Plant &
form of family business Machines

Have lower gestation

Generally utilize local
resources & produces
goods & services
period & are easy to set
Characteristics of SSI up in rural and
backward areas

The units is not owned, controlled or

subsidiary of any other industrial
undertakings
 To increase employment opportunities
through labour intensive process

To promote a decentralized To address the needs of

pattern of ownership local markets

To improve the standard of To stimulate growth of

living for the local local entrepreneurship
population

Objectives of SSI
To introduce new products
particularly to cater to the To foster diversification of
local needs economic activities
 Why Being Small is Efficient?

Economies of scale for certain trades

Lower transaction cost in small entity
More flexibility
Innovation – often possible in small flexible units
 Role of MSME’s in Economic Development
 Account for almost 45% of the total industrial production.
 Contributes 40% of the Exports of the country.
 Manufacture over 6,000 products of the country.
 The second largest employer in India after agriculture.
 The total jobs in the MSME’s in India goes up to 6 crores ( Acc to
11th 5 year Plan).
 Provides opportunities for development of technology.
 Contributes 5 – 8% of the GDP of the country.
Government Support for MSME’s During 11th Five
Years Plan (2007-2012)
 The 11th plan’s approach to the MSE sector marks a shift from the welfare approach
to that of empowerment. The strategy is two pronged it focuses on livelihood and
social security.

 Policy initiatives are proposed to incentivize MSE’s to achieve economies of scale by

expanding production. One possibility could be to allow them to retain the benefit of
excise duty exemption up to the prescribed limit even after they graduate into MSE’s.

 The MSE sector, including handlooms and handicrafts, presents an opportunity for
exports. The effort during the plan period will therefore be to organize this sector, to
create clusters of weavers/artisans to improve their bargaining power, and enable
them to pool resources.

 Banks will be encouraged to ensure that all loans up to 5 lakh to MSE’s are given free
of collateral at the interest rate of 8%.
Government Supports MSMEs For
Modernization
Productivity
Technological Needs
Skill Development & Up
gradation
Adequate & Affordable
assistance in Finance
 Problems of Small scale industries
Finance (scarcity of capital, non availability of credit facility)
Raw Material (Poor quality, uneven supply of raw material,
inadequate quantity)
Technology ( not exposed to latest technology)
Idle Capacity( due to underutilization)
Infrastructure (Transport,power,communication)
Marketing (not in a position to get first hand information about
the market)
Underutilization of Capacity (due to non availability of raw
material, power, finance)
Skilled Manpower (Being in backward areas)
Project Planning (Lack Tech& Economical)
Managerial inadequacies like overdependence
 Common Causes of Failure
Choosing a business that isn't very profitable.
Inadequate cash reserves.
Failure to clearly define and understand your market, your customers, and
your customers' buying habits.
Failure to price your product or service correctly.
Failure to adequately anticipate cash flow.
Failure to anticipate or react to competition, technology, or other changes in
the marketplace.
Overgeneralization.
Overdependence on a single customer
Uncontrolled growth.
Believing you can do everything yourself.
Putting up with inadequate management.
 Assistance and Support Services for Indian SMEs

Domestic Trade, Export, Import and Business enquiries

Information on marketing strategy & investment opportunities
Business Matchmaking and Buyer-Seller Meet
Design, Development and Launch of products
Acquire latest technology
Indian products and services permanent display centre in various
countries
Assistance to represent and participate in exhibitions, trade fairs,
seminars and conferences etc…
 Products Of MSME’s

22%

36%
Food Products

Chemicals

Metal Industry

Metal Products
12% Electrical & Machine Parts

Rubber & Plastic

Others

6% 10%

6%
8%
 Contribution of MSE (%) at 1999-
2007prices in
Year
Total Industrial Gross Domestic
Production Product (GDP)

1999-00 39.74 5.86

2000-01 39.71 6.04

2001-02 39.12 5.77

2002-03 38.89 5.91

2003-04 38.74 5.79

2004-05 38.62 5.84

2005-06 38.56 5.83

2006-07 38.57 5.94

Comparative Growth Rates.
Year Growth Rate Overall
of MSE Sector Industrial
(%) Sector (%)

2002-03 8.68 5.70

2003-04 9.64 6.90

2004-05 10.88 8.40

2005-06 12.32 8.10

2006-07 12.60 11.5

2007-08* 13.00* 8.00

•Big Boost For MSEs

•Compliance For Growth &

Sustainability

•Skill Development in Indian SMEs:

A Global Perspective

•Promoting Green Entrepreneurs

•Technology for SMEs

 CONCLUSION
Micro, small and medium enterprises (MSMEs)
collectively function as the fulcrum of the national
economy, accounting for the bulk of industrial
output, exports and employment. The Government
of India should consider the MSMEs as an important
pillar of economic growth and should support the
sector with proactive and growth oriented policies.
This can have wider impact on national economies
since MSMEs are the engines of economic growth .
 REFERENCES

www.smetimes.tradeindia.com/smeti
mes/.../additional-measures-
required-for-sme-sector.html
www.business-
standard.com/india/news/...base-
rate...to...msme.../on
SME Bussiness May-2010
www.msme.gov.in
www.msmefoundation.org
THANK YOU