ROLE OF SME’S IN ECONOMIC GROWTH OF INDIA

INTRODUCTION

Small and medium enterprises are the backbone of industrial development.

It is very important for both developed and developing country Small and medium enterprises always represented the model of economic development, which emphasized high contribution to domestic production, significant export earnings, low investment requirements, employment generation, effective contribution to foreign exchange earning of the nation with low import-intensive operations.

The development of this sector came about primarily due to the vision of our late Prime Minister Jawaharlal Nehru who sought to develop core industry and have a supporting sector in the form of small scale enterprises.

INTRODUCTION……..

SMEs sector has emerged as a dynamic and vibrant sector of the economy. The Indian economy is expected to grow by over 8 per cent per annum until 2020 and can become the second largest in the world, ahead of the United States, by 2050, and the third largest after China and the United States by 2032.

DEFINITION OF MSME

According to new THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 the MSME Definitions are as follows: In the case of the enterprises engaged in the manufacture or production of goods pertaining to any industry specified in the first schedule to the Industries (Development and Regulation) Act, 1951, as

DEFINITION OF MSME FOR MANUFACTURING SECTOR

Manufacturing Sector

Enterprises Investment in plant & machinery

Micro Enterprises Does not exceed twenty five lakh rupees

Small Enterprises More than twenty five lakh rupees but does not exceed five crore rupees

Medium Enterprises

More than five crore rupees but does not exceed ten crore rupees

DEFINITION OF MSME FOR SERVICE SECTOR

Service Sector

Enterprises Investment in plant & machinery

Micro Enterprises Does not exceed ten lakh rupees:

Small Enterprises More than  ten lakh rupees but does not exceed two crore rupees

Medium Enterprises More than two crore rupees but does not exceed five core rupees

SUPPORTING AGENCIES OF SMES

Some of the important organizations that are associated with SMEs in India are: Small Industries Development Organization (SIDO), National Small Industries Corporation Ltd. (NSIC), Small Industries Development Bank of India (SIDBI), Confederation of Indian Industry (CII), Laghu Udyog Bharti (LUB), Federation of Indian Chamber of Commerce and Industry (FICCI), Associated Chamber of Commerce and Industry of India (ASSOCHAM), National Institute of Small-Industry Extension Training (NISIET), World Association for Small and Medium Enterprises (WASME), Small Scale Industries Board (SSIB), PHD Chamber of Commerce and Industry (PHDCCI), Federation of Indian Exporters Organization (FIEO), Federation of Associations of Small Industries of India (FASII)

ROLE OF SMES IN INDIAN ECONOMY

In order understand the impact of SMEs on the Indian economy; one must study the trend and pattern that have been prevalent in the preceding years. It gives us the vivid picture of what follows next. Following graphics help us to understand the present scenario and their contributions of MSMEs in India.

MSMES SHARE BY SECTOR

GROWTH PERFORMANCE OF SMES OR MSMES IN INDIA

EMPLOYMENT IN MSME SECTOR

SECTOR WISE MSME

ACTIVITY WISE MSME

THE OPPORTUNITIES OF GROWTH IN THE SMES SECTOR

1. Less Capital Intensive 2. Extensive Promotion & Support by Government 3. Reservation for Exclusive Manufacture by small scale sector 4. Project Profiles 5. Funding - Finance & Subsidies 6. Machinery Procurement 7. Raw Material Procurement 8. Manpower Training 9. Technical & Managerial skills 10. Tooling & Testing support 11. Reservation for Exclusive Purchase by Government 12. Export Promotion 13. Growth in demand in the domestic market size due to

overall economic growth 14. Increasing Export Potential for Indian products

FACTORS AFFECTING SMES

MSMEs in India face several problems such as-

1. lack of availability of adequate and timely credit2. High cost of credit3. inadequate infrastructure facilities like power,

water and roads, and lack of access to modern technology.

4. limited access to equity capital5. problems in supply to government departments

and agencies6. procurement of raw materials at a competitive

price7. Issues of storage8. Designing, packaging and product display

CONCLUSION In India SMEs has achieved steady growth over

the last couple of years. The role of SMEs in the industrial sector is growing rapidly and they have become a thrust area for future growth. The Indian market is growing and the Indian industry is making rapid progress in various Industries like manufacturing, food processing, textile and garments, retail, precision engineering, information technology, pharmaceuticals, agro and service sectors. Under the changing economic scenario the SMEs have both the opportunities and challenges before them.