Micro, Small & Medium
Enterprises
The MSME sector involves micro, small and medium Enterprises that are
involved in the production, manufacturing, and processing of goods and
commodities. This criterion was first introduced by the government of India
through the Micro, Small & Medium Enterprises Development (MSMED)
Act, 2006.
The MSME sector forms the core of the Indian economy and has always
acted as the bulwark for the Indian economy, providing it strength and
resilience to tolerate global economic shocks and adversities.
This sector’s contribution to the economy includes 6.11% of the
manufacturing GDP and 24.63% of the GDP from service activities as well as
33.4% of India’s manufacturing output.
Throughout the country, it has around 63.4 million units. The MSME sector
constitutes around 45% of the overall exports from India and
provides employment to around 120 million persons.
• Micro - the investment in plant and machinery equipment will not be
more than 1 crore, and annual turnovers will not be more than 5
crore.
• Small - the investment in plant and machinery equipment will not be
more than 10 crores, and annual turnovers will not be more than 50
crores.
• Medium - As per the MSME classification criteria, the investment in
plant and machinery equipment of Medium enterprises is not more
than 20 crore, and the annual turnover is not more than 100 crore
Importance of MSME in the Indian
Economy
Micro, Small, and Medium Enterprises (MSME) play a vital role in the nation's economic
development. The significance of MSME for the growth and development of the country is as
follows:
• Micro, Small, and Medium Enterprises contribute to 29% of the Indian GDP, 45% of
manufacturing output, and about 40% of overall export, and it employs over 11 crore people,
out of which 55% of employment happens in urban enterprises which make MSMEs the
second largest employer after agriculture.
• The Ministry of Micro, Small, and Medium Enterprises has the aim to increase MSME's
contribution to Indian GDP from 29% to 50% by 2025 to become a 5 trillion dollar economy.
• MSMEs are also helping India by making it a manufacturing hub.
• Micro, Small, and Medium Enterprises also help uplift backward people and tackle poverty by
generating employment in rural areas through industrial development.
• Khadi and Village Industries, with low capital investment, employ a large number of women in
rural India and helps in the upliftment of rural and other backward areas.
Why the MSME sector is important
especially for India?
• Employment: The Indian MSME sector provides maximum opportunities for both self-
employment and wage-employment outside the agricultural sector.
• Help building inclusive and sustainable society: It contributes to building an inclusive and
sustainable society in innumerable ways through the creation of non-farm livelihood at low
cost, balanced regional development, gender and social balance, environmentally sustainable
development, etc.
• For example: Khadi and Village industries require low per capita investment and employs a
large number of women in rural areas.
• Contribution to GDP: With around 36.1 million units throughout the geographical expanse of
the country, MSMEs contribute around 6.11% of the manufacturing GDP and 24.63% of the
GDP from service activities.
• MSME ministry has set a target to up its contribution to GDP to 50% by 2025 as India
becomes a $5 trillion economy.
How many MSMEs does India have, who
owns them?
• According to the latest available
(2018-19) Annual Report of
Department of MSMEs, there are
6.34 crore MSMEs in the country.
• Around 51 per cent of these are
situated in rural India.
• Together, they employ a little over
11 crore people but 55 per cent of
the employment happens in the
urban MSMEs.
• Udyami Mitra Portal: launched by SIDBI to improve accessibility of credit and handholding services to
MSMEs.
• MSME Sambandh: To monitor the implementation of the public procurement from MSMEs by Central
Public Sector Enterprises.
• MSME Samadhaan: MSME Delayed Payment Portal –– will empower Micro and Small entrepreneurs
across the country to directly register their cases relating to delayed payments by Central
Ministries/Departments/CPSEs/State Governments.
• Digital MSME Scheme: It involves usage of Cloud Computing where MSMEs use the internet to access
common as well as tailor-made IT infrastructure
• Revamped Scheme of Fund for Regeneration Of Traditional Industries (SFURTI): organizes traditional
industries and artisans into clusters and make them competitive by enhancing their marketability &
equipping them with improved skills.
• A Scheme for Promoting Innovation, Rural Industry & Entrepreneurship (ASPIRE): creates new jobs &
reduce unemployment, promotes entrepreneurship culture, facilitates innovative business solution
etc.
• Micro & Small Enterprises Cluster Development Programme (MSE-CDP) – adopts cluster development
approach for enhancing the productivity and competitiveness as well as capacity building of MSEs.
• Credit Linked Capital Subsidy Scheme (CLCSS) is operational for upgradation of technology for MSMEs.