SEPTEMBER 2014

Point
Out
BY INVITE
MSME : LIFE LINE OF
ECONOMY
If we take a look globally, MSME density is the highest in
Brunei, Indonesia and Paraguay (as per research figures in
2010-2011) with economies having higher per capita GDP
witnessing more formalized MSME structures and support per
1000 people, Thereby business density having a positive
correlation with per capita income.
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MEENAKSHI LEKHI
W
hen
making economic
choices, would you choose
to expand the tax base from
6% to a much larger number,
create enterprise and jobs worth several
crores and ensure financial credit reaches
serious industry? Or would you support
status quo?
As we get into a phase of development,
whether political or economics, but the
choice to support and aid development is
one that determines our actions – and one
of the most crucial industries or sectors
that comes into the picture are Micro,
Small and Medium Enterprise. They are
the lifeline of any economy that is looking
at well-rounded, fast paced and holistic
development as it ushers in new growth
targets and a new dawn.
As per the MSME Development Act of
2006, MSME’s in India were identifiable
solely on initial investment – with different
figures for services and manufacturing. A
micro enterprise is defined as one with an
initial investment of under 25 lacs INR for
manufacturing and under 10 lacs INR for
services. A small enterprise is one with an
investment between 25 lacs and 5 crores
specifically for manufacturing while a
medium enterprise is between 5 and 10
crores. If we take a look globally, MSME
density is the highest in Brunei, Indonesia
and Paraguay (as per research figures
in 2010-2011) with economies having
higher per capita GDP witnessing more
formalized MSME structures and support
per 1000 people, Thereby business density
having a positive correlation with per
capita income.
New Definitions
To create conditions where MSMEs in
India come up to world standards of
efficacy and get the necessary support,
definitions must be looked into going
ahead. Unlike the Indian framework,
EU identifies MSMEs based on turnover
with a check on number of employees.
In such a scenario, an interesting statistic
in the European Union is that 99% of
all enterprise are MSME’s, with the
absolute count at over 20 million. As per
EU standards, micro enterprises have
under 10 employees and upto 16 crore
Euro turnover, small have less than 50
employees with an increased turnover
of under 80 crores Euro and the number
becomes 250 employees and upto 344
crores in the case of Medium Sized.
One look at our neighbour China and
their MSMEs drive 80% of all employment
within the country. India’s statistics on
this are in the gray area with only 6% of
Indians as pan card holders, 3% as tax
paying and a large unregistered set-up
where basics such as electricity, microcredit
and research support cannot make
it to the micro and small enterprises.
Catalog – for best interest of Govt
and MSME
A catalog is essential from the government’s
point of view to create a database that
may then be intelligently studied with
appropriate changes put forward in the
best manner. As per a business article
dated 3rd June 2014, India has one of the
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september 2014