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Report
MSMEs The Real Engines
of India's Economic Growth
Micro, Small and Medium Enterprises (MSMEs),
including khadi and village/rural enterprises credited
with generating the highest rates of employment growth,
account for a major share of industrial production and
exports. They also play a key role in the development of
economies with their effective, efficient, flexible and
innovative entrepreneurial spirit. The socio-economic
policies adopted by India since the Industries
(Development and Regulation) Act 1951 have laid stress
on MSMEs as a means to improve the country's economic
conditions.
The MSME sector contributes significantly to the
manufacturing output, employment and exports of the
country. It is estimated that in terms of value, the sector
accounts for about 45 per cent of the manufacturing
output and 40 per cent of the total exports of the country.
The sector is estimated to employ about 59 million
persons in over 26 million units throughout the country.
Further, this sector has consistently registered a higher
growth rate than the rest of the industrial sector. There are
over 6000 products ranging from traditional to high-tech
items, which are being manufactured by the MSMEs in
India. It is well known that the MSME sector provides the
maximum opportunities for both self-employment and
jobs after agriculture sector.
Recognizing the contribution and potential of the sector,
the definitions and coverage of the Small Scale Industry
(SSI) sector were broadened significantly under the
Micro, Small and Medium Enterprises Development
(MSMED) Act, 2006 which recognized the concept of
“enterprise” to include both manufacturing and services
sector besides, defining the medium enterprises. For
collecting and compiling the data for the MSME sector
(including khadi, village and coir industries), the Fourth
All India Census of MSMEs with reference year 2006-07,
was launched during 2007-08 in the country. The
collection of data from the registered part, namely the
Census units has been completed and a Report on
“Quick Results of 4th All India Census” comprising the
data of registered MSMEs and some data on
unregistered MSMEs extracted from Economic Census
(EC-2005) have been brought out. This has provided the
first database on the MSME sector after the enactment of
MSME Development Act, 2006. The collection of data
from the unregistered sector by way of the sample survey,
forming part of the Fourth All India Census is under
progress.
The MSME sector has maintained a higher rate of growth
vis-à-vis the overall industrial sector.
On 9 May 2007, subsequent to an amendment of the
Government of India (Allocation of Business) Rules,
1961, the Ministry of Small Scale Industries and the
Ministry of Agro and Rural Industries were merged to form
the Ministry of Micro, Small and Medium Enterprises
(MSME). This Ministry now designs policies,
programmes, projects and schemes and monitors their
implementation with a view to assist MSMEs and helps
them scale up.
The primary responsibility of promotion and
development of MSMEs is of the State Governments.
However, the Government of India, supplements the
efforts of the State Governments through different
initiatives.
The role of the Ministry of Micro, Small and Medium
Enterprises (M/o MSME) and its organisations is to assist
the States in their efforts to encourage entrepreneurship,
employment and livelihood opportunities and enhance
the competitiveness of MSMEs in the changed economic
scenario.
The schemes/programmes undertaken by the Ministry
and its organizations seek to facilitate/provide: (i)
adequate flow of credit from financial
institutions/banks;(ii) support for technology
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