January - March 2013 - National Institute of Rural Development

Small and Medium Enterprises In the Era of Globalisation 3fixed investment ` 5,008 billion, employment59.5 million, and exports ` 1,825 billion (US$40.36 billion) at current prices. In relation toall India export figure of US $126.4 billion for2006-07, MSME sector’s contribution is 32 percent, and has grown at 18.9 per cent over theprevious year, compared to 22.6 per cent foroverall exports. The estimates for 2010-11 are31.15 million total MSMEs, ` 7,735 billion fixedinvestment, ` 10,958 billion production atcurrent prices, and 73.22 million employment.Data relating to MSME exports is available onlyup to 2007-08. During 2007-08, MSME exportsaccounted for ` 2,020.2 billion at currentprices (US $50.25 billion), which works out to30.8 per cent of the country’s total exports ofUS $163.13 billion; and has grown at 24.5 percent over the previous year compared to 29per cent for overall exports. From 2006-07,data relating to the newly registered mediumenterprises are included in the revisedestimates. For earlier years, data cover onlymicro and small enterprises (Union Ministry ofMSME, Annual Report 2011-12).In the context of enhancingcompetitiveness of MSME sector, it is importantto recall a few landmarks / recentdevelopments which have resulted inincreased fierce competition globally, andeven in the domestic market.July 1991April 2001Announcement of liberalisationpolicy in industry andtrade sectorsVirtual dismantling of all thequantitative restrictions (QRs)by India permitting liberalimport of goods from othercountriesJanuary 2010 Prime Minister’s Task Force onMSMEs submits its report to thePrime Minister. Vigorous action steps are beingtaken thereafter on various areas forovercoming the problems faced by the MSMEsector. Apart from the general decline inindustrial production during the period ofglobal recession from September 2008 in thecountry, labour intensive export oriented smallenterprises have been adversely affected to agreater degree. These include industries suchas textiles, readymade garments, gems andjewellery, leather, handicrafts, handlooms, silkcarpets, marine products, toys, and sportsgoods. Export oriented industrial enterpriseshave been hit hard in a number of directionssuch as fierce global competition because ofrelatively low competitiveness of some of theIndian products, and rupee appreciation apartfrom recession in developed countries.MSMED Act, 2006The Micro, Small and Medium EnterprisesDevelopment (MSMED) Act has becomeoperational from October 2006. Being acomprehensive legislation for the promotion,development, and enhancement ofcompetitiveness of the MSME sector, a numberof measures were provided for in the Act forenhancing competitiveness of SMEs, and forenabling the enterprises to avail of thebenefits of global markets.Under the Act, the enterprises have beencategorised into those engaged in (a)Manufacturing, and (b) Providing / Renderingof Services. Both categories have been furtherdivided into micro, small and mediumenterprises, based on their investment in plantJournal of Rural Development, Vol. 32, No. 1, January - March : 2013JRD 2 (1)