Micro, Small & Medium Enterprises

Abstract within 300 words INTRODUCTION There is an increased recognition of the essential role played by micro, small and medium enterprises (MSMEs) in the economic development of a nation. In India, MSMEs is the main engine behind the economic growth due to its large contribution to GDP, employment generation, value addition, exports and overall growth and development of the economy. It also plays a significant role in the supply chain of large businesses.

Govt. of India has enacted the Micro, Small & Medium Enterprises Development Act-2006 with a view to providing a comprehensive legal frame work to address the needs of both the manufacturing and the service sector MSMEs, particularly to enable the MSMEs of the country to face the emerging challenges in a globalized and competitive market. One of the major problems faced by MSMEs in India, more particular in Odisha, is lack of finance to advance business growth. MSMEs lack setup capital, liquid capital, working capital and investment capital to survive and grow in a dynamic and predatory competitive business environment. MSMEs heavily depend on the financial institutions such as banks, credit corporations and development banks for the supply of finance to meet their daily financial needs. Against this backdrop this paper will examine the financial obstacles faced by MSMEs. The paper will provide some recommendations for change in government policy and regulation in assisting SMEs.

The Small-Scale Industries (SSI) gathered momentum along with industrialization and economic growth in India. It started growing due to the vision of our late Prime Minister Jawaharlal Nehru who sought to develop core industry and have a sustaining sector in the form of small-scale enterprises. Being a labor-intensive sector, they offer a higher productivity of capital than capital-intensive enterprises due to low investment per worker. The SSI today constitutes a very important segment of the Indian economy as they help in dispersal of industries, rural development, and the decentralization of economic power. The central discussion of this paper highlights the importance of small industries and their role in the economy and the impact of economic reforms on growth pattern and productivity performance of small-scale industries. However, this is not to say that there are no shortcomings within the industry, or in public policy relating to it. Small industries are faced with numerous problems major and minor, which make them either uncompetitive, or sick. An attempt is made to address some solutions that can improve their productivity by focusing on a sustainable vision. DEFINITION OF MSME

In accordance with the provision of Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 the Micro, Small and Medium Enterprises (MSME) are classified in two Classes:

(a) Manufacturing Enterprises- The enterprises engaged in the manufacture or production of goods pertaining to any industry specified in the first schedule to t he industries (Development and regulation) Act, 1951). The Manufacturing Enterprises are defined in terms of investment in Plant & Machinery.

(b) Service Enterprises: The enterprises engaged in providing or rendering of services and are defined in terms of investment in equipment.

Manufacturing Sector Enterprises Micro Small Medium Investment in plant & machinery Investment in plant and machinery less than Rs 25 lac Investment in plant and machinery over Rs 25 lac but not exceeding Rs 5 Cr Investment in plant and machinery over Rs 5 Crores but less than Rs 10 Cr

Service Sector Enterprises Micro Small Medium Investment in equipments Does not exceed ten lakh rupees: IMore than ten lakh rupees but does not exceed two crore rupees More than two crore rupees but does not exceed five core rupees

Recent Developments in Orissa about MSME

MSME

Orissa comes out with incentives to support MSMEs

DILIP BISOI Posted: Monday, Feb 02, 2009 at 0019 hrs IST

Tags: States | Orissa | Small And Medium Scale Enterprise

: The Orissa government on Sunday announced its first ever Micro, Small & Medium Enterprise (MSME) Policy 2009 doling out fiscal incentives and infrastructural supports to the industries coming up in the ancillary and downstream sectors. The policy, which got the state Cabinets approval on Sunday, provides 10% subsidy on capital investment to the tune of Rs 8 lakh and 12% on investment up to Rs 12 lakh. As part of the policy, the state government would reserve 20% land in industrial estates, industrial parks and industrial corridors for MSMEs. New industrial parks for MSMEs would be set up on a maximum area of 200 acres at all major industrial hubs in the state. To ensure adequate flow of credit, the state government would launch the Orissa MSME Venture Scheme and also constitute a credit-monitoring group. The policy aims to boost forward linkages and encourage formation of consortiums and sub-contract exchanges. It will... also promote adoption of cutting edge technology under the MSME Technology Upgradation Scheme. Cluster approach would be encouraged for development of MSMEs.

Even though the Cabinet took a slew of decisions on Sunday, there was no official briefing as the model code of conduct is in force for elections to Cuttack Municipal Corporation and Baripada Municipality. Government officials, however, disclosed the decisions on condition of anonymity.

The cabinet also took a decision to restructure the Orissa State Financial Corporation (OSFC) and the Orissa Small Industries Corporation (OSIC). The state government has decided to convert the Rs 254-crore OSFC loan to ordinary share capital so as to make it eligible for a line of credit from the Sidbi. It also decided to extend the OTS scheme for another six months with some liberal packages so that large number of defaulters would participate in the scheme. The Cabinet has decided that the government loan... of Rs 1.77 crore to the OSIC would be converted into share capital and written-off Rs 9.24 crore interest of small units.

The OSIC has been allowed to deal in cement and paints along with iron, steel and bitumen....

Orissa govt to develop four MSME clusters

Bishnu Dash / Bhubaneswar Dec 22, 2009, 00:46 IST
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The Orissa government has decided to develop four clusters under the National Manufacturing Competitiveness Programme (NMCP) being implemented by the Union ministry for Micro, Small and Medium Enterprises (MSME).

These clusters, included in the Lean Manufacturing Programme (LMP) component of the NMCP, are the granite cluster in Ganjam, the plastic cluster in Balasore, the sponge iron cluster in Rourkela and the Trishakti stone carving handicrafts cluster located at Khurda. The National Productivity Council (NPC) has been entrusted to provide the required consultancy to these clusters for improving their quality and productivity.

These clusters are among the 100 clusters which are to be taken up under the NMCP across the country in the first phase.

Sources said that the programme will kick-start in these four clusters by the end of this month. At least 10 small and medium enterprises (SMEs) will come together to form a Special Purpose Vehicle (SPV), which will be in charge of running the programme in the clusters concerned.

While four of the 20 clusters located in different parts of the state have been selected under the NMCP, the remaining 16 have been asked to prepare project proposals under the scheme. This will be sent to the Union MSME ministry in the next phase.

If the initiative succeeds, the product quality, productivity, shop floor management and inventory management of the SMEs will improve dramatically, a senior official of the state industry department told Business Standard.

The Union government had announced formulation of NMCP in 2005, with the aim of supporting SMEs in their endeavour to become competitive and adjust to the pressure arising out of liberalisation and moderation of tariffs. About Rs 276 crore is proposed to be spent under the programme.

In a separate initiative, the Orissa government has embarked on a cluster mapping exercise to attain optimum growth of the existing clusters and to identify the possible clusters in the state. This includes measures for the development of handicrafts clusters, small and medium enterprise clusters and cottage industries clusters.

Presentation

MSME Overall Scenario In the increasingly knowledge-driven economy, emerging trends are key consideration in day-today business decisions. New products, technologies and creative designs appear almost daily in the market and are the result of continuous human innovation and creativity. Micro, small and medium-sized enterprises are often the driving force behind such innovations. The MSME segment in India has been receiving focused attention. With the introduction of Micro Small & Medium Enterprises Development (MSMED) Act 2006, (complete notification can be accessed on www.dcmsme.gov.in) this sector is being increasingly viewed as an agent of economic growth by Government institutions, corporate bodies and banks. The policy focus and the Government's thrust towards promoting the MSME segment, along with globalization and India's robust economic growth, have paved the way to several latent business opportunities for this segment.