Economics Project

Topic: Micro and Small Scale Industries

Name of the student: Nadir Ali Sheikh

Class: 12 COM H

Board Exam Roll Number:

Teacher in charge: Mrs. Chandra

Date of Submission:
 Certificate

This is to certify that Aakash Kumar of [Link].

Has completed his Economics project under my supervision. He has taken proper

care and shown utmost sincerity in completing it.

I certify that this project is up to my supervision and as per the guidelines issued

by the MS University.

Mr. Navneet Garg

Signature:
 Acknowledgement

I would like to convey my heart full thanks to Mrs. Chandra my 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.

 Index

SR NO TOPIC Page Number

1 Objectives of the project

2 Introduction

3 Characteristics of Small Scale Industries

4 Role in the Indian Economy

5 Objectives of Small Scale Industries

6 Registration of Small Scale Industries in India

7 Eligibility Criteria for SSI Registration

8 Benefits of obtaining Small Scale Industries Registration

9 Employment in Small Scale Industries

10 MSME ACT 2006

11 Features of MSME

12 Role of MSMEs in Indian Economy

 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.

 Introduction

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 exceed Rs.10 crore, and turnover does not exceed Rs.50

crore.
 Benefits of obtaining Small Scale Industries Registration

 There are various tax rebates offered to small scale industries.

 A credit for Minimum Alternate Tax (MAT) is allowed to be carried

forward for up to 15 years instead of 10 years.

 There are many government tenders that are only open to the small scale

industries.

 Once registered the cost of acquiring a patent, or the cost of setting up

the industry reduces as many rebates and concessions are available.

 Business registered as small scale industries are given higher preference

for government license and certification.

 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 the MSME 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 products

for 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 socio-

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

Share of
MSME- Total
Share of
Addition Growth Addition Total MSME in
Year MSME in
of Gross (%) of Gross GDP
GVA (%) GDP (in
Value Value
%)

2011-
2622574 – 8106946 32.35 8736329 30
12

2012-
3020528 15.17 9202692 32.82 9944013 30.40
13

2013- 3389922 12.23 10363153 32.71 11233522 30.20

14

2014-
3704956 9.29 11504279 32.21 12467959 29.70
15

2015-
4025595 8.65 12566646 32.03 13764037 29.20
16

2016-
4405753 9.44 13841591 31.83 15253714 28.90
17

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)

o Credit Linked Capital Subsidy for Technology up gradation

o Marketing Support/Assistance to MSMEs (Bar Code)

o Lean Manufacturing Competitiveness for MSMEs

o Design Clinic for Design Expertise to MSMEs

 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.
 Bibliography

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transcripts-and-maps/small-scale-industry-1947