What is MSME? New definition of MSME and its contribution to the economy

What is MSME ? New definition of MSME : Small and Medium Enterprises (SMEs) make a significant contribution to the development of the Indian economy. This is why, from time to time, various schemes are initiated by the government to promote them. In this article, we will discuss what MSMEs are, their characteristics, their contribution to the Indian economy, etc.

What is MSME ?

MSME stands for Micro, Small, and Medium Enterprises, which refers to small and medium-sized businesses. The management of MSME is handled by the Ministry of Micro, Small, and Medium Enterprises (MoMSME). The MSME sector makes a significant contribution to India’s socio-economic development, which is why it is often referred to as the backbone of the Indian economy. This sector not only creates employment opportunities but also plays a crucial role in the development of rural areas. As per official figures until 31st August 2021, India has approximately 6.3 crore MSMEs.

To learn more about MSMEs, let’s delve into their fundamental aspects, classification, characteristics, role, and importance in socio-economic development.

New definition of MSME

The amount of investment and annual turnover for new businesses in both the manufacturing and service sectors is now equal, thereby bridging the gap between these two sectors.

MSME Loan Schemes Launched by Government of India

Below are some of the schemes initiated by financial institutions and the Government of India for MSMEs:

  • CGTMSE: Credit Guarantee Fund Trust for Micro and Small Enterprises
  • CLCSS: Credit Linked Capital Subsidy Scheme
  • Credit Guarantee Scheme
  • Mudra Yojana under PMMY: Pradhan Mantri Mudra Yojana
  • Subsidy by National Small Industries Corporation (NSIC)
  • PMEGP: Prime Minister’s Employment Generation Programme
  • PMRY: Prime Minister’s Rozgar Yojana
  • PSB Loan in 59 Minutes
  • Stand Up India
  • Startup India

Features of Ministry of MSME (MoMSME)

It works for the welfare of workers and laborers by providing:

  • Credit limits or financial assistance from banks.
  • Entrepreneurship development through specialized training centers, promoting new business ventures, and working on skill upgradation.
  • Supporting technology upgradation, infrastructure development, and modernization.
  • Providing assistance for easy access to domestic and export markets.
  • Offering modern testing facilities and quality certification.
  • Supporting packaging, product development, and design intervention.

Major entities working under MoMSME

  • ASPIRE: Scheme for Promotion of Innovation, Rural Industries, and Entrepreneurship
  • KVIC: Khadi and Village Industries Commission
  • MGIRI: Mahatma Gandhi Institute for Rural Industrialization
  • NIMSME: National Institute for Micro, Small, and Medium Enterprises
  • NSIC: National Small Industries Corporation
  • SFURTI: Scheme of Fund for Regeneration of Traditional Industries

Opportunities in MSME

The MSME industry holds immense potential due to the following factors:

  • Boosting exports for Indian products.
  • Funding – finance and subsidies.
  • Promotion and support for new businesses by the government.
  • Increased demand in domestic markets.
  • Need for low capital investment.
  • Manpower training.
  • Project profiling.
  • Purchase of raw materials and machinery.
  • Tooling and testing support, and much more.

Role of MSME in Indian economy

  • In 1961, the Ministry of Small Scale Industries and the Ministry of Agriculture and Rural Industries were merged to form the Ministry of Micro, Small, and Medium Enterprises (M/o MSME).
  • MSMEs produce and manufacture various types of products for both domestic and international markets. They also assist in the development of khadi, village, and coir industries with the help of related ministries, state governments, and stakeholders.
  • The data provided in the table below is based on the Central Statistics Office (CSO) and the Ministry of Statistics and Programme Implementation (MOSPI):
  • [The table data would need to be provided separately for me to assist with its interpretation.]

Read More:

Leave a Comment