Presented By:Soumya Makker

(Roll No. 0671663907)

MBA, 3rd Semester

INTRODUCTION

The President under Notification dated 9th May 2007 amended

the Government of India (Allocation of Business) Rules, 1961.
Pursuant to this amendment, Ministry of Agro and Rural
Industries (Krishi Evam Gramin Udyog Mantralaya) and
Ministry of Small Scale Industries (Laghu Udyog Mantralaya)
have been merged into a single Ministry, namely, MINISTRY
OF MICRO, SMALL AND MEDIUM ENTERPRISES (SUKSHMA
LAGHU AUR MADHYAM UDYAM MANTRALAYA)
The MSEs constitute over 90% of total enterprises in most of
the economies and are credited with generating the highest
rates of employment growth and account for a major share of
industrial production and exports.
It is estimated that in terms of value, the sector accounts for
about 39% of the manufacturing output and around 33% of
the total export of the country.
Further, in recent years the MSE sector has consistently
registered higher growth rate compared to the overall
industrial sector.
As per available statistics, this sector employs an estimated 31
million persons spread over 12.8 million enterprises.

Definition
In accordance with provision of Micro, Small &
Medium Enterprises Development (MSMED) Act, 2006
MSMEs are classified in two Classes:
1.

2.

Manufacturing Enterprises: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)
Services Enterprises:The enterprises engaged in providing or rendering of
services

Limits for investment in 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
More than five crore
rupees but does not
exceed ten crore rupees

Medium Enterprises

Limits for investment in Services Sector

Enterprises

Investment in
equipments

Micro Enterprises

Does not exceed ten lakh

rupees

Small Enterprises

More than ten lakh

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

Medium Enterprises

Objectives

To Impart greater vitality and growth

impetus to the Micro, Small and Medium
Enterprises (MSME) in terms of output,
employment and exports
To instill a competitive culture based on
heightened technology awareness.

Office of Development
Commissioner (MSME) Network

Organisational Structure

The Ministry of Micro, Small and Medium

Enterprises (M/o MSME) is the administrative
Ministry in the Government of India for all
matters relating to Micro, Small and Medium
Enterprises.
The Office of the Development Commissioner
(MSME) is an attached office of the Ministry of
MSME, and is the apex body to advise, coordinate
and formulate policies and programmes for the
development and promotion of the MSME Sector.

Institutional Network

The Development Commissioner (MSME) have a

network of: 30 MSME-Development Institutes (MSME-DI)
28 Br. MSME-Development Institutes (Br. MSME-DI)
4 MSME-Testing Centers (MSME-TCs)
7 MSME-Testing Stations (MSME-TSs)
21 Autonomous bodies which include :

10 Tool Rooms (TRs) and Tool Design Institutes (TDI)

4 MSME-Technology Development Center (MSME-TDC)
2
1
1
3

MSME-Technology Development Center-Footwear (MSME-TDC)

Electronics Service & Training Centre (ESTC)
Institute for Design of Electrical Measuring Instruments (IDEMI)
National Level Training Institutes

Tool Rooms/Tool Design

Institutes (TRs/TDI)

To assist MSMEs in technical upgradation,

provide good quality tooling by designing and
producing tools, moulds, jigs & fixtures,
components, etc.
Provide Training and consultancy for tool and
die markers.

MSME-Testing Center (MSME-TC)

Provides Testing facilities for quality

upgradation
Training/constancy in testing, quality control,
quality management
Process quality control systems, etc.
Product specific testing facilities are provided
by MSME-Testing Stations (MSME-TSs)

MSME-Technology Development
Center (MSME-TDC)

These are product specific Centers to:

look into their specific problems and
render technical service
develop and upgrade technologies
manpower development and training

MSME-Technology Development
Center-Footwear (MSME-TDC)

Develop footwear designing to

promote exports
Training for manpower in Footwear
Industry.

Training Institutes

1.

2.

3.

There are three National Level Training

Institutes.
National Institute of Micro, Small and
Medium Industry Extension Training (
NIMSMIET), Hyderabad
National Institute for Entrepreneurship
and Small Business Development (
NIESBUD), New Delhi
Indian Institute of Entrepreneurship
(IIE), Guwahati

Other Associated Agencies

National Small Industries Corporation

(NSIC)
Small Industries Development Bank
of India (SIDBI)
Khadi and Village Industries
Commission (KVIC)

Setting up a Micro, Small and

Medium Scale Unit

The following processes are involved:Project Selection

Technology and Machinery
Arranging Finance
Unit Development
Filing of Entrepreneurs Memorandum
Approvals
Clearances
Quality Certification

Project Selection
It all begins with an Idea and ideas need to
be filtered :-

Does the idea fire up your motivation?

Is it a viable business proposition in your area?
Check it out with basic market research
Test it out at market place
Consult with the experts
Look out for competition in the field
Is it a sunrise industry?
Your business opportunity
Project conceptualisation

Project Selection (Continued)

Once the ideas are screened and a viable business

opportunity emerges the project has to be
conceptualized in all its dimensions.
The 4 Ps of Project Conception are:
1. PRODUCT (Shape, Size and Nature)
2. PROCESS (Technology to produce the product)
3. PLACE (Location of Plant)
4. PARTNER (Technological or Financial Collaborator)

Technology and Machinery

Process Selection

While checking out on a process technology, the

following things need to be considered with
utmost care:
-Whether process requires very high level of skilled
workers or complex machines?
-Whether process requires large quantities of water
and/or power?
-Whether any process or product patent needs to
be honoured while utilising the selected process
technology.
-Any special pollution or environmental regulations.
-Finally, the appropriateness to the Indian
environment and conditions.

NSIC procedures for hire purchase of machinery

The hire purchase application is to be made on the prescribed form.

The Director of Industries of the State forwards the application to the
head office of the NSIC at Delhi with his recommendation and
comments.
All applications for indigenous or imported machines are considered by
acceptance committees comprising of the representatives of the Chief
Controller of Imports, Development Commissioner, micro, small and
medium enterprises and other concerned departments.
Decision of these committees is conveyed to the parties concerned with
copies to the regional offices of the NSIC and the concerned Directorate
of Industries.
Once all these formalities are completed by the hirer, instructions are
sent to the suppliers to dispatch the consignment to the hirer and to
send the R/R or C/R as the case may be, to the regional office .
The NSIC after ensuring that all dues have been paid by the hirer,
releases the R/R or C/R to him for taking delivery of the machines.
In case of imported machines, the procedure is slightly different in as
much as the shipping documents are sent to the clearing agents for
clearing the consignment from the Customs and dispatching it to the
hirer.

Arranging Finance

Financial assistance in India for MSME units is

available from a variety of institutions. The
important ones are
SIDBI: Small Industries Development Bank of
India (refinance and direct lending)
SFCs: State level Financial Corporation e.g. Delhi
Financial Corporation.
NSIC: National Micro, Small and Medium
Enterprises.
Micro, Small and Medium Enterprises of
various states.
Commercial/Co-operative Banks.
DIC: District Industry Centre.

Unit Development
It involves:1.
Construction of building
2.
Getting the Utility connections
3.
Getting 3Ms right:a)
b)
c)

Men
Machinery
Materials

Filing of Entrepreneurs Memorandum

Section 8 of the Micro, Small and

Medium Enterprises Development
(MSMED) Act, 2006 provides for filing of
memorandum by a Micro, Small or
Medium Enterprise.
Sub-section (2) of section 8 stipulates that
the form of the Memorandum, the
procedure of its filing and other matters
incidental thereto shall be such as notified
by the Central Government.

Approvals

Licensing in the Industries sector is governed by

the licensing exemption notification issued by
Govt. of India in July 25 1991 under the
Industries (Development and Regulation) Act,
1951.
In SSI, no industrial license is required except in
case of 6 product groups included in compulsory
licensing.
But if a small-scale unit employs less than 50/100
workers with/without power then it would not
require a license from the Govt. of India.
Subject to this, an entrepreneur can set up a SSI
unit anywhere in the country without any
restriction

Clearances
An entrepreneur has to obtain several
clearances or permissions depending upon the
nature of his unit and products manufactured.
The various kinds of clearances are:2.

Regulatory or Taxation Clearances

Environment & Pollution Related
Clearances

3.

Product Specific Clearances

1.

Quality Certification

To avail the certification of ISO-9000, a unit has to

undertake significant costs
However, it has been decided to push the quality
upgradation programme in the SSI Sector in a big
way.
In order to promote modernization and technology
upgradation in SSI, the units are assisted in
improving the quality of their products.
A new scheme has been launched to assist SSI units
in obtaining ISO-9000 or an equivalent international
quality standard.
Subject to an upper ceiling of Rs 0.75 lacs, each unit
is given financial assistance equal to 75% of the
costs incurred in acquiring the quality standard.

Performance of Small Scale Industries

The economic indicators are:1.
Production
2.
Employment
3.
Export
4.
Opportunity

SSIs IN INDIA
Estimated No. of Units

3.57 Million

Employment

19.96 Million

Share in Industrial Value

Added
Share in Total Exports
1. Direct
2. Overall

39%

Total Number of Items

Produced
Number of Reserved
Items

45%
34%
Over 8000
675

TRENDS IN GROWTH SSI &

INDUSTRIAL
SECTOR
(in
%)
Year
SSI Sector Industrial Sector
1991-92
1992-93

3.1
5.6

0.6
2.3

1993-94

7.1

6.0

1994-95
1995-96
1996-97

10.1
11.4
11.3

9.4
12.1
7.1

1997-98

8.43

5.8

1998-99
1999-2000

7.7
8.16

4.0
6.5

TRENDS IN GROWTH OF EMPLOYMENT

IN SSI & INDUSTRIAL SECTOR (in %)

As per the estimates compiled for

the year 2005-06, the employment
was 294.91 lakh persons in SSI
sector.
The share of SSIs in the total
employment among units engaged in
manufacturing and services is around
34.93%.

THANK YOU