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1 Growth of Micro, Small & Medium Enterprises in India.

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Presentation on theme: "1 Growth of Micro, Small & Medium Enterprises in India."— Presentation transcript:

1 1 Growth of Micro, Small & Medium Enterprises in India

2 2 After India’s independence, Cottage and Small scale sector was given prime importance in the economic and industrial policies for: a) a)Industrial dispersal b) b)Employment creation

3 3 a) a)Reservation of items for exclusive manufacturing in small sector b) b)Preferential credit support measures c) c)Preferential government procurement policies d) d)Fiscal concessions e) e)Infrastructural development like development of industrial estates, testing labs, common facility centres f) f)Entrepreneurship development Specific policy measures initiated for boosting the growth of tiny, small and cottage industries:

4 4 13 Million MSMEs > 8000 products 45% industrial production 40% Exports 31 Million Employment PERFORMANCE AND CONTRIBUTION OF MSMEs For MSEs  Industrial Production – 39%  Exports : 34% MSMEs

5 5 Micro, Small and Enterprises Development Act 2006 (MSMED) Micro, Small and Medium Enterprises Development Act 2006 (MSMED) MSMED Act 2006 promulgated in order to : 1. 1.remove impediments due to multiple laws 2. 2.introduce statutory consultative and recommendatory bodies on MSME policies 3. 3.improve registration procedures of MSMEs 4. 4.statutory basis for purchase preference and credit policies 5. 5.Improve realisation of payments of MSMEs

6 6 Micro, Small and Medium Enterprises Development Act, 2006 Salient Features 1.Industry replaced by enterprise which include service enterprises also. 2.Ambit of sector enlarged to cover medium enterprises. 3.Constitution of MSME Board 4.Simplification of registration procedure

7 7 5.Policy of preferential procurement from MSMEs 6.Progressive credit support 7.Penalty for delayed payments 8.Provision for exit policy

8 8 Manufacturing Enterprises Micro Rs. 2.5 million (US$ 56000) Small Rs. 50 million (US$ 1.1 million) Medium Rs. 100 million (US$ 2.2 million) Services Enterprises MSME classification based on investment limit in plant and machinery: Micro Rs. 1 million (US$ 22000) Small Rs. 20 million (US$ 0.4 million) Medium Rs. 50 million (US$ 1.1 million)

9 9 Institutional Support Structure for MSMEs in India At Federal Level 1.Ministry of MSMEs 2.Small Industries Development Organisation (SIDO) 3.National Small Industries Corporation(NSIC) 4.Khadi & Village Industries Commission(KVIC) 5.Coir Board 6.Entrepreneurship Development Institutions (EDIs) MSMEs At State Level 1.Directorate of Industries 2.District Industries Centres 3.State Finance Corporation 4.State Industrial Development Corporation 5.Technical Consultancy Organisations 6.Entrepreneurship Development Institutions (EDIs) Others 1.Industry Associations 2.NGOs 3.Banks/Financial Institutions


11 11 Credit Support 1.Public sector banks advised to double the flow of credit to MSMEs within 5 years (20% annual growth) 2.A minimum of 40% of bank credit earmarked for priority sector lending which includes loans to MSEs 3.Specialised SME Bank branches in industrial clusters for smooth flow of credit to MSMEs 4.One Time Settlement (OTS) scheme for settling NPAs of MSMEs 5.Interest band prescribed

12 12 1.Helps MSMEs in accessing credits from banks & financial institutions, orders from foreign buyers 2.Helps in assessing their strengths and weaknesses. 3.Rating by one of the empanelled national or international Rating agencies. 4.Government subsidises 75% of the cost of Rating fee 5.Concessional credits from Banks/FIs to such rated units Performance and Credit Rating Scheme

13 13 Credit Guarantee Fund for Small Enterprises Credit Guarantee Fund Trust for Micro & Small Enterprises (CGFTSI) gives guarantee to its Member Lending Institutions for their collatoral free loans to MSEs upto INR 2.5 million (USD 64000). Initial guarantee fee at specified rate (1.5% ) of the credit facility sanctioned shall be paid upfront and thereafter annual fee. Provides comfort to the Banks and Financial Institutions.

14 14 Technological Support 1.Credit Linked Capital Subsidy Scheme for Technology Upgradation Scheme meant to improve quality of products by technology upgradation. Investment upto INR 10 million (US$.250,000) eligible for support with subsidy upto 15% on investment. 2.Technology Business Incubators for incubating new enterprises 3.Testing Centres for Quality Certification 4.Tool Rooms and Training Centres for skill upgradation 5.Incentive scheme for obtaining ISO Certification by MSEs

15 15 Marketing Assistance and Export Promotion 1.Support for participation in trade fairs and exhibitions – national as well as international 2.Training programmes on packaging for exports 3.Purchase preference in Government procurement 4.Market Development Assistance Scheme for publicity, market studies and adoption of modern market practices

16 16 Cluster Development Programme  technology upgradation & productivity improvement  energy conservation & pollution control Rs 1 million assistance for capacity building activities without fixed assets Grant upto 80% of Project cost with ceiling of Rs.100 million to implementing agency for:

17 17 Entrepreneurship Development Programmes Prime Minister’s Employment Generation Programme – PMEGP EDP Institutes Incubators

18 18 International Cooperation Programme Provides exposure to MSMEs to the latest technologies, manufacturing practices prevalent in their fields in different countries. Encourages their participation in international exhibitions for exports


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