MSME Sector In Indıa - sersc
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
International Journal of Advanced Science and Technology
Vol. 29, No. 6s, (2020), pp. 3006 – 3012
`
MSME Sector In Indıa
1
Shreeya Verma, 2Dr. Madhura Bedarkar
1,2
Symbiosis Institute of Business Management Pune; Symbiosis International (Deemed
University) Pune
Abstract
With the changing scenario in the Indian economy in terms of increase in availability of
resources, ease of doing business and other factors, the micro, small and medium sector
industries and enterprises have started playing a major role in the growth of the economic
structure. These particular industries in India are majorly heterogenous when weighed on
different parameters such as, Enterprise size, range of services and products offered,
technical advancements etc. This industry is a mix of Information Technology, chemicals,
food processing, packaging, manufacturing, infrastructure and service industry to name
some products and services. The sector has shown higher growth percentage when
compared with other sectors and has also been acting as a major employer by giving out
more job opportunities, especially in the rural areas as about 20% of such enterprises are
established in rural regions and villages. All in all, in the past decades MSMEs had a major
role to play in the economic structure and growth scenario for any developing nation.
However, while making such socio-economic changes in an economy, any enterprise has to
go overcome a lot of struggles such as scarcity of raw materials, lack of financial resources
and timely credit facilities, lack of technical skills, insufficient development of
entrepreneurial skills, lack of training and development of human resources and complex
laws and regulations among others. As for the contribution of this sector in India on
quantitative basis, it has been recorded at 6.11% to the manufacturing sector’s gross
domestic production and 24.63 towards the service sector respectively. The industry employs
around 120 million persons along with a contribution of 45% to the overall Indian exports.
The sector has maintained a consistent growth rate of about 10% since past few years. The
main purpose of this study is to analyse the current situation of micro, small and medium
industries in a developing country like India with some focus on technological changes in the
industry and the impact.
1 Introduction:
The importance of MSME industries significantly increased in past few years in all countries irrespective
of being developed or developing. In recent years, the industry has been a very diverse and vibrant area
for the economy. The sector encourages a spirit of entrepreneurship, effectiveness, efficiency and
flexibility among individuals. There is a significant contribution of the sectors towards Indian
manufacturing output, employment generation with a major share in industrial output growth and exports.
MSME enterprises enjoy some unique advantages due to their size, such as higher labour-capital ratio,
need for a shorter incubation period, their focus is on small markets, lowered investment requirement,
more equitable distribution of national income, and lastly stimulating the growth of industrial
entrepreneurship. These enterprises also act an ancillary to large industries and play a role in the socio-
economic growth of India. With this kind of contribution, the MSME sector makes to Indian economy it
can be easily said that the sector acts a strong pillar of the economy. The importance of this sector is
bound to increase in future as India moves in direction of a faster and all-round growth agenda. This
sector has also been predicted to contribute to the target of raising primary sector’s contribution to India’s
Gross Domestic Product to 25% by the end of 2022 (Dr Sanjeeb Kumar Dey 2014)
ISSN: 2005-4238 IJAST
3006
Copyright ⓒ 2020 SERSCInternational Journal of Advanced Science and Technology
Vol. 29, No. 6s, (2020), pp. 3006 – 3012
`
2 Theoretical Framework
What are micro, small and medium industries?
These small, micro and medium industries are defined as per a government act, the MSME Development
Act, 2006 and such businesses are further classified into:
1. Manufacturing Industries – These are industries engaged in production of goods in different industries
or if such enterprises install plant and machinery with the purpose of adding value to an existing product.
These enterprises are defined basis their expenditure in plant and machinery.
2. Service Industries – Such businesses are involved in catering and servicing their customers and are
classified on basis of their expenditure on equipment.
The bifurcation of industries in manufacture or service basis their respective investments in plant and
machinery or equipment are tabulated below
Manufacturing Investment in Plant &
Industries Machinery (in INR)
Micro not more than 25 lakhs
Industries
Small 25 lakhsInternational Journal of Advanced Science and Technology
Vol. 29, No. 6s, (2020), pp. 3006 – 3012
`
• sufficient flow of financial resources / credit
• technological support in adapting to latest techniques and modernisation
• unified or consolidated infrastructural policies
• latest testing facilities and quality certification
• continuous training on latest management techniques
• improvement of entrepreneurship skills with the help of proper training
• assistance in design updating, product development, and packaging
• well-being and interest of workers and artisans
• ease of doing business in all markets i.e. domestic as well as in exports
Khadi has great significance in India. Be its role in Indian freedom movement or creating employment for
a lot of Indians at a low per capita cost, industries like khadi and village signify a major part of India’s
rich heritage Khadi and Village Industry under the Ministry of MSME not only provides sustainable
employment to a major portion of the village population not only represent the country’s rich heritage and
legacy but also has a clientele in mid and higher strata of the country’s societal set up.
The Coir Industry originally originated in the state of Kerala and is an agro based industry. The industry
has spread to different coconut growing states like Tripura, West Bengal, Maharashtra, Andhra Pradesh,
Orrisa, Assam, etc. The industry aims to increase its export business by growing and developing through
technology advancements and product diversification. Coir Geotextiles is one such example. The industry
has gained popularity due to environment friendly products.
B. Ministry Establishment
The MSME ministry is classified into two divisions
Division of Small and Medium Enterprises, and Division of Agro and Rural Industry (ARI). The SME
Division is assigned the regulation and administrative oversight function of the National Small Industries
Corporation (NSIC) Ltd., an agency of the public sector and the three originations of autonomous
entrepreneurship / training at national level. The Division is also responsible for the implementation of
performance and credit rating schemes and the assistance schemes for training institutions, among others.
The SMEs Division is also responsible for preparing and recording the Results Process Document (RFD),
as adopted by cabinet secretariat in 2009 under the Performance Management and Assessment Program
(PMES).
ARI Division is responsible for overseeing two legislative bodies viz. The Khadi and Village Industries
Commission (KVIC), Coir Board and newly established Mahatma Gandhi Rural Industrialization Institute
(MGIRI). It also monitors implementation of the plans for the generation of jobs under the PMEGP.
The enforcement of schemes and policies and other programs in order to facilitate assistance and
guidance to MSME's is done through different connected offices and respective officials namely, Office
of the Development Commissioner (010 DC (MSME)) and some others as well.
ISSN: 2005-4238 IJAST
3008
Copyright ⓒ 2020 SERSCInternational Journal of Advanced Science and Technology
Vol. 29, No. 6s, (2020), pp. 3006 – 3012
`
(MSME Ministry website).
C. Support System Developed by the Central Government
Office of Development Commissioner
Development Commissionerate is responsible for implementing all government plans and policies for the
infrastructure and support services to the enterprises. It is a connected ministry office and is managed by
the Additional Secretary and Development Commissioner. The Commissionerate operates via a series and
framework of Institutes for MSME Development, Manufacturing Centres, Regional Test Centres,
Footwear Training Institutes, and Specialised Institutions.
a. Khadi Village Industries Commission (KVIC)
The Commission was set up in 1956 under the Khadi and Village Industries Act, and works under the
Ministry of MSMEs. The main objective of KVIC includes, increasing employment options in rural areas,
producing saleable articles, and finally building a strong rural community spirit and self-reliance among
rural people.
b. Coir Board
Under the Coir Industry Act 1953, this board was formed to promote the growth rate of the industry and
to improve the living environment of the traditional industry manpower. India as the world's largest coir
producer accounts for nearly 80 per cent of demand. The coir products include exquisite artifacts,
handicrafts, and other utility items made from the husk of coconut. This sector is very diverse and
includes families, NGOs, cooperatives, producers and exporters.
c. National Institute for Micro, Small and Medium Enterprises (NIMSME)
This institute was formally set up by the name of Central Industrial Extension Training Institute (CIETI)
in 1960, under Industry and Commerce Ministry. NIMSE's primary aim was to educate the coaches. Due
to various technological advances and rapidly evolving business conditions, the company has widened its
reach and is now into consulting and services like quality management, finances and information. The
company has identified areas (such as Entrepreneurial Development, NGO networking, Transfer, Policy
Issue, Cluster development, Environmental concerns, Technology Upgradation) that require significant
emphasis and exploration with economic development target in mind.
3 Data Sources and Methodology
The study is done to examine an overall scenario of MSME in a country like India. Thus, the data used for
this study is a macro level data collected from MSME Ministry, Make in India and other governmental
sources. and data from agencies like KPMG, Crisil along with few research papers and news articles.
4 Results and Findings
• Number of enterprises in India: registered & unregistered consolidated and estimated at 42.5
million. A whopping 95 % of the country's overall manufacturing units.
ISSN: 2005-4238 IJAST
3009
Copyright ⓒ 2020 SERSCInternational Journal of Advanced Science and Technology
Vol. 29, No. 6s, (2020), pp. 3006 – 3012
`
• SME & Employment opportunity: 106 million jobs, 40 percent of Indian work force is
involved, with only sector that employs more manpower being agriculture.
• Products: Makes over 6000 products.
• GDP Contribution: approximately 6.11% to production and 24.63% to service sector.
• Output: 45 per cent of India's overall production volume.
• Exports: 40 percent of overall exports.
• Bank Loans: Accounts for 16 percent of bank loans
• Assets (Fixed): Present Rs. 1,471,912.94 crore.
• SME Growth Rate: achieved and stabilised an average growth rate of more than 10 percent
(Sources: msme.gov.in/KPMG/CRISIL/CII).
The total amount of exports made by the Micro, Small and Medium Enterprises in year 2017-18 touched
USD 124.4 Bn as per the information provided by Directorate General of Commercial Intelligence and
Statistics (DGCIS)
Maharashtra 11.04 lakh (approx.)
Bihar 8.3 lakhs (approx.)
Tamil Nadu 7.9 lakhs (approx.)
Uttar Pradesh 7.6 lakhs (approx.)
Madhya Pradesh 6.4 lakhs (approx.)
Table 3. States with highest number of MSMEs (Source – Make in India)
As we can see, SMEs are acting as key drivers in the economic development of the nation. With states
like Maharashtra, Bihar, Tamil Nadu, Uttar Pradesh and Madhya Pradesh leading in terms of production
output.
A. Government Schemes
No. of MSMEs under
Udyog Aadhar
Memorandum (UAM)
Micro 60,32,100
Small 7,28,516
Medium 28,611
Table 4. MSMEs registered under Udyog Aadhar memorandum.(Source: Make in India)
The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) was introduced by the
Government to make collateral-free credit available to entrepreneurs in this sector. The number and
amount of Guarantees approved under the CGTMSE during the last 2 years is given below:
ISSN: 2005-4238 IJAST
3010
Copyright ⓒ 2020 SERSCInternational Journal of Advanced Science and Technology
Vol. 29, No. 6s, (2020), pp. 3006 – 3012
`
Year No of credit Amount of
facility guarantees
approved approved
2017-18 2.63 19065.91
2018-19 4.36 30168.57
(Sources Nitin Gadkari, MSME Minister - June 2019)
India is projected to become a leading economy in these coming years and the Micro, Small and Medium
Enterprise industry is surely going to be a pivotal part of the $5 Trillion USD Indian economy goal by
2025. However, the industry needs the right support and resources for driving this growth.
The government of India has a vision to raise MSMEs share in Indian gross domestic product from
current 29% to 50%. In order to achieve this goal, the exports contribution of this sector is expected to
increase from 50% to 75%, simultaneously increasing the employment opportunity to 15 crore people
which at present is restricted to 11.1. crore people.
The ministry plans to open a new website majorly consisting of team which will focus on new pool of
ideas, research and innovation only. It also plans to work of marketing plans for such enterprises, plans
which are similar to Alibaba and Amazon.
The latest Union Budget is a big highlight of the plans and way forward that India’s government is
working towards the growth of the MSME sector realising the important role it can play in the growth of
the country. It can also be noticed that the major focus in the development of this sector is via investment
in technology and skill development.
The following are the major highlights for the MSME sector as stated in the Union Budget 2019-20
1. Allocation of $ 1 billion USD for the sector
2. Another $50.1 million would be allocated to the ‘Interest Subvention’. By implement this rule the
target is to provide rebate up to 2% on additional loans up to INR 1 crore for MSMEs having GST
registration.
3. Under the Credit Support Program, $85.4 million would be provided to ensure hassle free credit
guarantee MSMEs.
4. 20 large and 100 small Technology Centres are expected to set up with a fund allocation of USD
858.12 million. These centres are being set up as an extension of the 12 initiatives announced in Nov18,
and are expected to facilitate growth and expansion of MSMEs in the country.
(Source – Make in India)
5 Conclusion and Future Scope
The MSME sector in India has become the backbone of the economy. It has also relentlessly acted as a
growth driver for the economic structure providing it the safety net to safeguard against global economic
shocks adversities. The future prospects for the growth of these industries are far better than their Asian
competitors. A major explanation for such prospects is the implementation of single tax regime in India
i.e. GST which will lead to increase in interstate sales, decrease in cost of domestic raw materials,
decreased freight cost and most importantly transparency and ease of doing business.
ISSN: 2005-4238 IJAST
3011
Copyright ⓒ 2020 SERSCInternational Journal of Advanced Science and Technology
Vol. 29, No. 6s, (2020), pp. 3006 – 3012
`
With the Indian government aims to make the country’s economy a USD 5 Trillion economy by 2025 and
with rapid technological advancements happening across the globe, SMEs are bound to play an important
role in reaching this goal.
References
1. Yogesh Kumar & A nil K. Yadav, 2018."Growth, Employment and Output Generation in MSME
in India: An Analysis,"Working Papers id:12754, eSocialSciences.
2. Dr. Meeravali Shaik; Mr. K.V Ramesh; Mr. K Ajay Kumar; Mr. G. Sekhar Babu (2017)
Performance of MSME sector in India.
3. Website – Ministry of Micro, Small and Medium Enterprises Link: https://msme.gov.in/
4. https://pib.gov.in/Pressreleaseshare.aspx?PRID=1579757
5. Make in India Website http://www.makeinindia.com/msme
6. Make in India- MSME achievement report Link - https://www.makeinindia.com/article/-
/v/msme-sector-achievement-report
7. FICCI – Grant Thomton Report on ‘Vision 2020 – Implications for MSMEs’
8. KPMG – Confederation of Indian Industry ‘The new wave Indian MSME
9. Financial Express – December 2019 - 99% MSMEs created these many jobs, given this much
money under govt’s scheme to create enterprises. Link -
https://www.financialexpress.com/industry/sme/msme-skill-pmegp-micro-enterprises-small-
businesses-employment-msme-loan-given-to-msme-msme-ministry-nitin-gadkari/1789698/
10. Economic Times – June 2019 - Vision to increase MSMEs contribution to GDP to 50%. Link -
https://economictimes.indiatimes.com/small-biz/sme-sector/vision-is-to-increase-msmes-
contribution-to-gdp-to-50-nitin-gadkari/articleshow/69978436.cms?from=mdr
11. Business Today Budget 2020 – Accelerating Growth for MSME – Can I Help? Link -
https://www.businesstoday.in/union-budget-2020/columns/budget-2020-accelerating-growth-for-
msme-can-artifical-intelligence-help/story/395124.html
12. Business World – Indian MSMEs and spirit of Enterprise – Link
http://www.businessworld.in/article/Indian-MSMEs-And-Spirit-Of-Enterprise/09-10-2019-
177258/
ISSN: 2005-4238 IJAST
3012
Copyright ⓒ 2020 SERSCYou can also read
