Growth of Micro, Small & Medium Enterprises in India

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

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

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

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

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

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

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

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

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

10. MAJOR SCHEMES FOR MSME’s SUPPORT

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

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

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. Technological Support • 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. • Technology Business Incubators for incubating new enterprises • Testing Centres for Quality Certification • Tool Rooms and Training Centres for skill upgradation • Incentive scheme for obtaining ISO Certification by MSEs

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

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

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

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

19. THANK YOU