MSME (Ministry of Micro, Small and Medium Enterprises) has been classified into two groups/classes by the Micro, Small & Medium Enterprises Development (MSMED) Act, 2006.
- Manufacturing Enterprises- The Manufacturing Enterprises are defined in the terms of “Investment in Plant and Machinery”. These are engaged in the manufacturing and production of goods. In this only plants and machinery are also employed or are used to produce quality products on which distinct names or characters are used.
- Service Enterprises- The Service Enterprises are defined in the terms of “Investment in Equipment”. And these are engaged in providing different types of services.
In India, there are more than 60 Lakhs registrations in MSMEs, and it is estimated that with the help of new changes it can even cross the digit of 6 Crores very soon. The government has proposed many schemes too so that MSMEs stay motivated and get benefits accordingly.
As per the new changes which the government has made recently due to pandemic investment up to Rs. 1 Crore and turnover of Rs. 5 Crore will be considered as Micro Enterprises, investment up to Rs. 10 Crore and turnover of Rs. 50 Crore will be considered as Small Enterprises, a similar investment with Rs. 20 Crore and the turnover of Rs. 100 Crore will be considered as Medium Enterprises.
Importance of MSME in India
MSMEs are an important part of Indian Economy as it contributes 40% of the total production, manufacturing, trading, and services as well. Not only in India but worldwide MSMEs are considered as the main part of the contribution in Economic growth. MSME was firstly introduced in the year of 2006. To increase the number of MSMEs, the government has done all the work paperless that means you can easily register yourself as MSME online on some government’s certified sites.
Let’s have a look at some of the main points from which MSME is contributing regularly in the economic growth and what is its importance-
- It Creates Large Scale Employment- Enterprises which are included in these sectors require less amount of investment to start any kind of business. These sectors are expected to generate more employment especially in backward areas, and rural areas. More than millions of graduates and engineers are passing every year and no one in this world can help them with the job. And here comes the role of MSME to provide them with the jobs and bring new talent in them.
- Encourages Growth- The inclusive growth is fully dependent on Medium, and Small and Medium-sized enterprises for the last few decades. The only thing from which India is lacking in development is poverty, deprivation, and unemployment. There is a challenge of marginalized society in front of the Ministry of MSME.
- It Provides Economic Stability- Its contribution in terms of India’s GDP is 8% and that’s the reason why it is not taken lightly. MSMEs are helping in exporting, manufacturing, producing, trading, and many more. Even MNCs have started showing interest in them by purchasing semi-finished goods or those who just require its assembly. Hence results in good relations between MSME and MNCs.
- Cheap Labors- With the increase in population and demand it is no less than a challenge to find cheap laborers who can work 6 or 7 days a week. But for MSMEs, it not that hard to find cheap laborers as they don’t need skilled laborers and they also require less no. laborers for work. And this results in low cost or fewer expenses.
- No fancy Structure Or Management- MSME’s work or industries are mainly set up in the rural or backward areas and therefore, they can start with the minimum resources also. And this directly lowers the cost of those resources also which are not required. But it requires a fully skilled man or woman for different departments to lead them and comes with the best solutions to any problem.
- Contributing to the “Make In India” Mission- From the day when the mission “Make In India” was announced by the Prime Minister of India it has started giving contributions at different levels. And it also said that MSME is the backbone of the mission which helps in completing the dreams of India. The government has done all the things so easily that people can register and can have certificates also.
- Promotes Innovations- Due to lack of employment MSMEs are forced to hire freshers and that’s the reason why new and unique innovations are happening daily. And they are also helping entrepreneurs to build some unique products and services which people can’t deny from buying them and using them.
With the new and updated changes made in the MSME, the sector government has proposed many new schemes under which one can easily register their business and have a collateral-free loan and that as soon as possible. As the pandemic had hit the Indian Economy so badly that MSME is the only thing left which can improve and bring it back on track.
We have seen and read in the newspaper that many skilled laborers are forced to leave the cities because of the lack of resources and employment too. And the government is concerned about those workers as well. That’s why they have made many changes in MSME to provide employment to those workers in those areas where they are living.