Micro Small and Medium Enterprises (MSME) sector

Micro, Small and Medium enterprises (MSMEs) are small sized entities, defined in terms of their size of Investment. They are contributing significantly to output, EMPLOYMENT export etc. in the economy. They perform a critical role in the economy by providing employment to a large number of unskilled and semi-skilled people, contributing to exports, raising manufacturing sector production and extending support to bigger industries by supplying raw material, basic goods, finished parts and components, etc.

As per the ‘MSME at a Glance’ Report of the Ministry of MSMEs, the sector consists of 36 million units and provides employment to over 80 million persons. The Sector produces more than 6,000 products contributing to about 8% of GDP besides 45% to the total manufacturing output and 40% to the exports from the country.

The MSMEs are classified in terms of investment made in plant and machineries if they are operating in the manufacturing sector and investment in equipment for service sector companies.

Though the primary responsibility of promotion and development of MSMEs is of the State Governments, the center has passed an Act in 2006 to empower the sector and also has formed a Ministry (Ministry of MSMEs). It was the Micro, Small and Medium Enterprises Development (MSMED) Act which was notified in 2006 that defined the three tier of micro, small and medium enterprises and set investment limits.

Classification of the MSME Ceiling on Investment in Plant and Machinery

Micro Below 25 lakhs

Small 25 lakhs to 5 crores

Medium 5 crores to 10 crores

For the service sector, the investment limits are Rs 10 lakh, 2 crores and 5 crores in terms of investment made in equipment. In 2015, the government has introduced an amendment bill to enhance the investment limit in all categories.

Credit support for MSME

The Ministry of MSME, Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) with a view to facilitate flow of credit to the MSE sector without the need for collaterals/ third party guarantees. The main objective of the scheme is that the lender should give importance to project viability and secure the credit facility purely on the primary security of the assets financed.The Credit Guarantee scheme (CGS) seeks to reassure the lender that, in the event of an MSE unit, which availed collateral- free credit facilities, fails to discharge its liabilities to the lender, the Guarantee Trust would make good the loss incurred by the lender up to 85 per cent of the outstanding amount in default. The CGTMSE would provide cover for credit facility up to Rs. 100 lakh which have been extended by lending institutions without any collateral security and /or third party guarantees. A guarantee and annual service fee is charged by the CGTMSE to avail of the guarantee cover. Presently the guarantee fee and annual service charges are to be borne by the borrower.

Credit Linked Capital Subsidy Scheme

Ministry implements a scheme called Credit Linked Capital Subsidy Scheme (CLCSS) for technology upgradation of Micro and Small enterprises in the country. Under the scheme, 15 per cent capital subsidy, limited to maximum of Rs 15 lakh (12 per cent prior to 29.09.2005 limited to maximum of Rs 4.8 lakh) is provided to the eligible MSEs for upgrading their technology with the well-established and improved technology as approved under the scheme. 48 products/sub-sectors have been approved under the CLCSS till date. If you are an MSE manufacturing a product and want to upgrade the technology of manufacturing the product with the well established and improved technology as approved under the Scheme, then you may have to approach to the nodal agencies/eligible financial institution for sanction of term loan for purchase of eligible machinery.

Cluster development

wherein support is provided for Diagnostic Study; Soft Interventions like general awareness, counseling, motivation and trust building, exposure visits, market development including exports, participation in seminars, workshops and training programmes on technology upgradaion etc; Hard Interventions ilike setting up of Common Facility Centers (Common Production/Processing Centre, Design Centre, Testing Centre etc.) and creation/upgradation of infrastructural facilities in the new/existing industrial areas/ clusters of MSEs.

Skill development

The training programmes are primarily focused to promote self employment in the country. Thus all type of programmes have input which provide necessary information and skills to a trainee to enable him to establish his own micro or a small enterprises. The programmes include two week Entrepreneurship Development Prorgamme (EDP), Six Week Entrepreneurship Skill Development Programme (ESDP). One weak Management Development Prorgamme (MDP), One Day Industrial Motivation Campaign(IMC) etc. For Monitoring of the programme a web based system has been developed where coordinator of the programme is bound to feed all details of trainees including his photo and phone no. on the website. The same will be linked to the call centre of Ministry where real time feedback is obtained from trainees.

National Manufacturing Competitiveness Programme

The National Manufacturing Competitiveness Programme (NMCP) is the nodal programme of the Government to develop global competitiveness among Indian MSMEs. The Programme was initiated in 2007-08. This programme targets at enhancing the entire value chain of the MSME sector through the following schemes:(a) Lean Manufacturing Competitiveness Scheme for MSMEs;(b) Promotion of Information & Communication Tools (ICT) in MSME sector;(c) Technology and Quality Up gradation Support to MSMEs;(d) Design Clinics scheme for MSMEs;(e) Enabling Manufacturing Sector to be Competitive through Quality Management Standards (QMS) and Quality Technology Tools (QTT);(f) Marketing Assistance and Technology Up gradation Scheme for MSMEs;(g) Setting up of Mini Tool Room under PPP Mode;(h) National campaign for building awareness on Intellectual Property Rights (IPR);(i) Support for Entrepreneurial and Managerial Development of SMEs through Incubators.(j) Bar Code under Market Development Assistance (MDA) scheme.,

Micro, Small and Medium Enterprises (MSMEs) are the backbone of the Indian economy. They account for over 90% of all enterprises in India and employ over 60% of the workforce. MSMEs play a vital role in the country’s economic Growth and development.

The MSME sector is defined as enterprises with investment in plant and machinery up to Rs. 10 crore for manufacturing enterprises and Rs. 5 crore for service enterprises. The sector is further classified into micro, small and medium enterprises based on their investment in plant and machinery.

Micro enterprises are those with investment in plant and machinery up to Rs. 25 lakh. Small enterprises are those with investment in plant and machinery between Rs. 25 lakh and Rs. 5 crore. Medium enterprises are those with investment in plant and machinery above Rs. 5 crore.

MSMEs are registered with the Ministry of Micro, Small and Medium Enterprises (MSME). The registration process is simple and can be done online. Once registered, MSMEs are eligible for a number of benefits and schemes offered by the government.

MSMEs can avail loans from banks and financial institutions at a lower interest rate. They are also eligible for government grants and subsidies. The government has also launched a number of schemes to support MSMEs, such as the Pradhan Mantri Mudra Yojana (PMMY), the Stand Up India scheme and the Atal Innovation Mission (AIM).

MSMEs face a number of challenges, such as access to finance, lack of skilled manpower, poor Infrastructure-2/”>INFRASTRUCTURE and competition from large enterprises. However, they also have a number of opportunities, such as the growing domestic market, the increasing demand for Indian products and Services in the global market and the government’s support.

There are a number of success stories of MSMEs in India. Some of the well-known MSMEs include ITC, Infosys, Wipro, Tata Group and Reliance Industries. These companies have achieved great success in the domestic and global markets.

The future of the MSME sector is bright. The sector is expected to grow at a faster rate than the overall economy. The government is committed to supporting the sector and has announced a number of measures to promote its growth. With the right support, MSMEs can play a major role in the country’s Economic Development.

Here are some of the key challenges faced by MSMEs in India:

Access to finance: MSMEs often face difficulty in accessing finance from banks and financial institutions. This is due to a number of factors, such as lack of collateral, poor financial track record and high risk perception.
Lack of skilled manpower: MSMEs often face difficulty in finding skilled manpower. This is due to the mismatch between the skills required by MSMEs and the skills available in the market.
Poor infrastructure: MSMEs often face problems related to infrastructure, such as power supply, transportation and communication. This can hinder their growth and productivity.
Competition from large enterprises: MSMEs often face competition from large enterprises. This is due to the fact that large enterprises have access to economies of scale, better technology and marketing Resources.

Despite these challenges, MSMEs have a number of opportunities. Some of the key opportunities for MSMEs in India include:

Growing domestic market: The Indian economy is growing at a rapid pace. This is creating a number of opportunities for MSMEs to grow and expand their businesses.
Increasing demand for Indian products and services in the global market: The demand for Indian products and services is increasing in the global market. This is providing MSMEs with an opportunity to expand their businesses in the global market.
Government support: The government is committed to supporting the MSME sector. The government has announced a number of measures to promote the growth of the sector.

With the right support, MSMEs can play a major role in the country’s economic development. They can create jobs, generate income and contribute to the country’s exports.

What is a business?

A business is an organization that provides goods or services to customers in exchange for Money. Businesses can be small, medium, or large, and they can operate in a variety of industries.

What are the different types of businesses?

There are many different types of businesses, but some of the most common include:

Sole proprietorships: A sole proprietorship is a business owned and operated by one person.
Partnerships: A PARTNERSHIP is a business owned and operated by two or more people.
Corporations: A corporation is a business that is owned by its shareholders.
Limited liability companies (LLCs): An LLC is a business that combines the features of a partnership and a corporation.

What are the benefits of starting a business?

There are many benefits to starting a business, including:

Financial independence: When you own your own business, you are your own boss and you can set your own hours.
Personal satisfaction: Starting and running a business can be very rewarding, both personally and financially.
Job creation: When you start a business, you create jobs for yourself and for others.
Innovation: Businesses are often at the forefront of innovation, and they can help to drive economic growth.

What are the challenges of starting a business?

There are also some challenges associated with starting a business, including:

Financial risk: Starting a business can be expensive, and there is always the risk that you will not be successful.
Time commitment: Starting and running a business requires a lot of time and effort.
Competition: There are many businesses out there, and you will need to find a way to compete with them.
Regulation: Businesses are subject to a variety of regulations, which can be complex and time-consuming to comply with.

What are the steps involved in starting a business?

The steps involved in starting a business vary depending on the type of business you are starting, but some of the most common steps include:

Developing a business plan: A business plan is a document that outlines your business goals, strategies, and how you plan to achieve them.
Conducting market research: Market research is essential for understanding your target market and developing a product or service that meets their needs.
Registering your business: You will need to register your business with the appropriate government agencies.
Obtaining financing: You will need to obtain financing to cover the costs of starting your business.
Building a team: You will need to build a team of talented and experienced people to help you run your business.
Marketing your business: You will need to market your business to potential customers.
Managing your business: Once your business is up and running, you will need to manage it on a day-to-day basis.

What are some resources for entrepreneurs?

There are many resources available to entrepreneurs, including:

The Small Business Administration (SBA): The SBA is a government agency that provides a variety of resources to small businesses, including loans, grants, and counseling.
The U.S. Chamber of Commerce: The Chamber of Commerce is a business organization that provides a variety of resources to businesses, including networking opportunities and advocacy.
SCORE: SCORE is a nonprofit organization that provides free counseling and mentoring to small businesses.
The National Federation of Independent Business (NFIB): The NFIB is a small business advocacy group that provides a variety of resources to small businesses, including lobbying and legal assistance.

What are some common mistakes that entrepreneurs make?

Some common mistakes that entrepreneurs make include:

Not having a business plan: A business plan is essential for understanding your business goals, strategies, and how you plan to achieve them.
Not doing enough market research: Market research is essential for understanding your target market and developing a product or service that meets their needs.
Not obtaining enough financing: You will need to obtain financing to cover the costs of starting your business.
Not building a strong team: You will need to build a team of talented and experienced people to help you run your business.
Not marketing your business effectively: You will need to market your business to potential customers.
Not managing their business effectively: Once your business is up and running, you will need to manage it on a day-to-day basis.

Sure, here are some MCQs without mentioning the topic Micro Small and Medium Enterprises (MSME) sector:

Which of the following is not a type of business organization?
(A) Sole proprietorship
(B) Partnership
(C) Corporation
(D) MSME
Which of the following is a benefit of starting a business as a sole proprietorship?
(A) You have complete control over the business.
(B) You are personally liable for the debts of the business.
(C) You are not required to file any paperwork with the government.
(D) You can easily raise capital from investors.
Which of the following is a benefit of starting a business as a partnership?
(A) You have limited liability for the debts of the business.
(B) You can easily raise capital from investors.
(C) You can share the responsibilities of running the business with other people.
(D) You are not required to file any paperwork with the government.
Which of the following is a benefit of starting a business as a corporation?
(A) You have limited liability for the debts of the business.
(B) You can easily raise capital from investors.
(C) You can sell Shares of your company to the public.
(D) You are not required to file any paperwork with the government.
Which of the following is a challenge of starting a business as a sole proprietorship?
(A) You have unlimited liability for the debts of the business.
(B) You are personally responsible for all of the taxes associated with the business.
(C) It can be difficult to raise capital from investors.
(D) It can be difficult to find qualified employees.
Which of the following is a challenge of starting a business as a partnership?
(A) You have unlimited liability for the debts of the business.
(B) You are personally responsible for all of the taxes associated with the business.
(C) It can be difficult to raise capital from investors.
(D) It can be difficult to find qualified employees.
Which of the following is a challenge of starting a business as a corporation?
(A) It can be expensive to set up a corporation.
(B) You are subject to double Taxation.
(C) It can be difficult to manage a corporation.
(D) It can be difficult to sell shares of your company to the public.
Which of the following is a type of business loan?
(A) Term loan
(B) Line of credit
(C) Equipment loan
(D) All of the above
Which of the following is a type of government assistance for small businesses?
(A) Small Business Administration (SBA) loans
(B) Small Business Innovation Research (SBIR) grants
(C) Economic Development Administration (EDA) grants
(D) All of the above
Which of the following is a type of business insurance?
(A) General liability insurance
(B) Property insurance
(C) Workers’ compensation insurance
(D) All of the above

I hope these MCQs are helpful!