The role of Micro, Small and Medium Scale Enterprises in India 11 December 2008 Consulate General of India Hong Kong 1

 As elsewhere, MSMEs are accepted as the engine of economic growth and for promoting equitable development. MSMEs are credited with generating highest rates of employment growth and account for a major share of industrial production and exports.  MSMEs have consistently registered higher growth rates compared to the overall industrial sector.  A major advantage of the sector is its employment potential at low capital cost.  Additionally, the sector is labour intensive - estimates are that it is almost 4 times higher than the large enterprises. 2

Small Scale UnitUSD 100,000 Medium Scale UnitUSD 200,000 3  Estimated that, in terms of value, MSMEs account for about 39% of the manufacturing output and around 33% of the total export of the country.  Presently, this sector employs an estimated 31 million persons spread over 12.8 million enterprises.  Accounts for 91% of total Industrial Units  Over 21,400 units are ISO 9000/14001 certified  Wide range of Products - Over 8000

TRENDS IN GROWTH 4 YEARGDP% INDUSTRIAL SECTOR % MSME SECTOR %

5 PRODUCTS OF MSMEs More than 8000 products

 Readymade Garments  Chemicals and Pharmaceuticals  Engineering Goods  Processed Foods  Leather Products  Marine Products 6 MAJOR EXPORT PRODUCTS

 Generation of Employment  Dispersal of Economy  Utilization of Local Skills and Resources  Meeting Demands Locally, as Feasible MSME AS TOOL OF STATE POLICY

ACT : CLASSIFICATION  Concept of ‘Enterprises’, as against ‘Industries’  Enterprises are engaged either in MANUFACTURE or SERVICES

 Protection – Hundreds of items reserved for exclusive production  High Tariff Barriers to protect local units  Purchase Preference by Government  Equity / Foreign Investment Restrictions NOW, almost all gone MOVE FROM PROTECTION TO COMPETITION 9

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Benefits from JVs/TCs to foreign partners Subjective benefits to Indian SMEs from JV/TCs Improvement in Profitability/cost competitiveness Market knowledge Growth in overseas business/exportsBrand reputation Growth in domestic market shareManagerial skills Higher productivity and resource utilization Credibility Getting access to quality labour poolMinimization of risks Strong research capabilityOthers

 By States  Industrial land, plots, sheds and workplaces  Roads  Power distribution  Institutional buildings  By Federal Government  Communication  Power generation  Funding to States / Private players  Transportation 13 GENERAL INFRASTRUCTURE SUPPORT

Thank you for your attention For more information, please contact us Consulate General of India in Hong Kong 16-D, United Centre, 95 Queensway, Hong Kong Tel: Fax: Website: 14

GDP (at current prices)US$ 830 billion GDP Growth Rate9.4% PPP4th largest economy; US$ 4.2 trillion Per capita Income ( ) (current prices) US$ 651 FDI ( )US$ 19.5 billion FII ( )US$ 7 billion Exports - (April 06 - March 07) (April-October 07) US$ billion (up 21%) US$ 85.5 billion (up 21%) Imports - (April 06 - March 07) (April-October 07) US$ billion (up 26.4%) US$ billion (up 25%) Main trading partnersUSA, China, EU, UAE, Saudi Arabia Singapore, Japan

IndiaChina Area (m km 2 ) Arable area (m km 2 ) Population (billion) GDP by sector: Services (%) Agriculture (%) Industry (%)