ROLE OF SMEs IN INDIAN ECONOMY

Presented by :Manoj Mishra Saurabh Rai

LEARNING OBJECTIVES:
Micro, Small and Medium Enterprises Development

Act, 2006 Classification of SMEs Objectives of SMEs Importance of SMEs Advantages of SMEs Promotional Measures Role of SMEs in Indian Economy Conclusion

THE MICRO, SMALL & MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006

SALIENT FEATURES:
Defines Enterprise instead of Industry to give due

recognition to the service sector. Classification of SMEs. Investment ceiling for manufacturing small enterprises raised to Rs. 5 Crore. Defines Medium Enterprises to facilitate achievement of economies of scale. Provides statutory basis to the National Board for Micro, Small & Medium Enterprises.

CLASSIFICATION OF SMEs
ENTERPRISE MANUFACTURING ENTERPRISE SERVICE ENTERPRISE

MICRO ENTERPRISE

MEDIUM ENTERPRISE

MICRO ENTERPRISE

MEDIUM ENTERPRISE

SMALL ENTERPRISE

SMALL ENTERPRISE

MANUFACTURING ENTERPRISES
Investment limits:
Micro Enterprises- Upto Rs. 25 lakh Small Enterprises- Above Rs. 25 lakh & upto Rs. 5 cr Medium Enterprises - Above Rs. 5 cr & upto Rs. 10 cr

SERVICE ENTERPRISES
Investment limits:
Micro Enterprises- Upto Rs. 10 lakh Small Enterprises- Above Rs. 10 lakh & upto Rs. 2cr Medium Enterprises - Above Rs. 2 cr & upto Rs. 5 cr

PERIODIC REVISIONS OF DEFINITIONS OF SMEs

1950-51
Capital assets not

1958-59
Capital investment is less

exceeding Rs. 0.5 million.

Employment less then 50

than Rs. 0.5 million.

As it was in 1950-51, per day

workers per day {with use of power} or less than 100 workers per day{without use of power}

employment criteria was replaced by a per shift provision.

Contd
1980-81
Up to Rs. 2 million only.

1987-98
Up to Rs. 30 million

Units located in rural

Government of INDIA has

areas/towns with a maximum population of up to 50,000 as per 1971 census.

since decided to lower the ceiling from Rs. 30 million to Rs. 10 million.

Contd.
1999-2000
Up to Rs. 10 million The limit for the units in selected products of knit wears and hand tools was allowed up to Rs. 50 million.

OBJECTIVES:
Creating permanent and immediate employment.
Meeting major part of increased consumer demand. Facilitating utilization of resources. Import substitution

IMPORTANCE OF SMEs:
SMEs are much labour intensive than large scale enterprise..
Capacity to adjust with changing environment. SMEs are expected to earn more quick returns. Essential for combating poverty and unemployment.

List Of Items Reserved For Exclusive Manufacture In Small Scale Sector

Food and allied industries
Textile products including hosiery Wooden and wood products Paper products Rubber products etc.

ADVANTAGES OF SMEs
High employment potential Provide vast scope for employment of special

categories like women, old-aged, physically handicapped etc.

Contd
Reduce regional imbalances.
Help increase the pace of rural development. Accounts for about one-third of out total export

earnings.

PROMOTIONAL MEASURES
Reservation of products
Reservation and preference in government

procurement Infrastructural and institutional support Machinery on higher purchase Marketing assistance

Contd
Financial assistance
Training Supply of raw materials

Industrial Estates (IE) Programme

EPZs/SEZs Export Industrial Parks Cluster development

ROLE OF SMEs IN INDIAN ECONOMY

EMPLOYMENT GENERATION:

Employment opportunities created in different regions:

Tamil Nadu (14.5%)
Maharashtra (9.7%), Uttar Pradesh (9.5%) West Bengal (8.5%) Gujarat (7.6%) Andhra Pradesh (7.5%) Karnataka (6.7%)

and Punjab (5.6%)

PRODUCTION:

Increment in production:
SMEs Contribute 40% of the gross manufacture to the

Indian economy.
An increment of 31.21 lakh in 1999.

EXPORT :

Cont.
45% - 50% of the Indian Exports is being contributed by

SMEs .
The product groups where the SMEs dominates in exports,

are -sports goods, readymade garments, woollen garments and knitwear, plastic products, processed food and leather products.

GROSS DOMESTIC PRODUT:

SME Contribution to GDP:
The total production of SMEs was 61,228 crores in 1985-1986 which rose to 6, 25,000 in 2000-01. The Eleventh Plan, therefore, aims at an increase in investment in the private sector to 28.7% from an average of 25.1%in the Tenth Plan.

SMEs Contribute to 9% of GDP of INDIA , It contributes 40% of the gross manufacture to the Indian economy.

ECONOMIC INDICATORS:
Small & medium enterprises have emerged as a dynamic

and vibrant sector of the economy.

- Today, it accounts for nearly 35% of the gross value of output in the manufacturing sector and over 40% of the total exports from the country.

- In terms of value added this sector accounts for about 40% of the value added in the manufacturing sector.

Opportunity:

The opportunities in the small-scale sector are enormous due to the following factors:
Less Capital Intensive Extensive Promotion & Support by Government Growth in demand in the domestic market size Raw Material Procurement Manpower Training

 Per capita income

Social justice.

CONCLUSION: The SMEs, in particular, have a vital role to play in making

the growth regionally balanced, and in generating widely dispersed off-farm employment, some of it in rural areas. SMEs are expected to create the bulk of new employment, it is particularly important to make the financial system more efficient in meeting the needs of our expanding private sector, and to ensure financial inclusiveness.

BIBLIOGRAPHY: INDIA 2009 -(MINISTRY OF INFORMATION

&BROADCASTING) Economic Survey 2008-2009 Entrepreneurship and small business management :M.B. SHUKLA MINISTRY OF SMALL AND MEDIUM ENTERPRISE: www.dcmsme.gov.in www.google.com www. Wikipedia.com