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1.1 SMEs IN INDIA With the advent of planned economy from 1951 and the subsequent industrial policy followed by Government of India, both planners and Government earmarked a special role for small-scale industries and medium scale industries in the Indian economy. Due protection was accorded to both sectors, and particularly for small scale industries from 1951 to 1991, till the nation adopted a policy of liberalization and globalization. Certain products were reserved for small-scale units for a long time, though this list of products is decreasing due to change in industrial policies and climate. SMEs always represented the model of socio-economic policies of Government of India which emphasized judicious use of foreign exchange for import of capital goods and inputs; labour intensive mode of production; employment generation; non concentration of diffusion of economic power in the hands of few (as in the case of big houses); discouraging monopolistic practices of production and marketing; and finally effective contribution to foreign exchange earning of the nation with low import-intensive operations. It was also coupled with the policy of de-concentration of industrial activities in few geographical centers. In the Indian context, micro, small and medium enterprises as per the MSME Development Act, 2006 are defined based on their investment in plant and machinery(for manufacturing enterprise) and on equipments for enterprises providing or rendering services. According to the Micro, Small and Medium Enterprises (MSME) Development Act of 2006, (India) a micro enterprise is where the investment in plant and machinery does not exceed twenty five lakh rupees. A medium enterprise is where the investment in plant and machinery is more than five crore rupees but does not exceed ten crore rupees. A small enterprise is where the investment in plant and machinery is more than twenty five lakh rupees but does not exceed five crore rupees. In the case of the enterprises engaged in providing or rendering of services, as (a) a micro enterprise is where the investment in equipment does not exceed ten lakh rupees. (b) a small enterprise is where the investment in equipment is more than ten lakh rupees but does not exceed two crore rupees. (c) a medium enterprise is where the investment in equipment is more than two crore rupees but does not exceed five crore rupees.
recent ceilings on investment for enterprises to be classified as micro. 50 million/ Rs. SMEs in India met the expectations of the Government in this respect. 2 crore Small (US$ 1 million) (US$ 40. 5 crore Medium (US$ 2 million) (US$ 1 million) * Investment limit in Plant & Machinery ** Investment limit in equipments *** Rs 50 = 1 USD It can be observed that by and large. which made it possible for them to achieve the following objectives: (i) High contribution to domestic production (ii) Significant export earnings (iii)Low investment requirements (iv) Operational flexibility (v) Location wise mobility (vi) Low intensive imports (vii) Capacities to develop appropriate indigenous technology (viii) Import substitution (ix) Contribution towards defense production (x) Technology – oriented industries (xi) Competitiveness in domestic and export markets . small and medium enterprises are as follows: 1. 1 million/ Rs.000) Rs.000) (US$ 20. SMEs developed in a manner.According to the Ministry of Micro.2 Classification Manufacturing Enterprises* Service Enterprises** Classification Manufacturing Enterprises* Service Enterprises** Rs. 25 lakh Rs. 2. 5 crore Rs.00. Small and Medium Enterprises.000) Rs. 10 crore Rs. 20 million/ Rs. 50 million/ Rs. 100 million/ Rs. 10 lakh Micro (US$ 50.5 million/ Rs.
Leather and leather goods h. Plastics products As a result of globalization and liberalization. international business outlook. Electronics e. particularly USA and European Union and enhanced competition from China and a few low cost centers of production from abroad many units have been facing a tough time. Textiles and Garments g. Indian SMEs have been passing through a transitional period. Chemicals & Pharmaceuticals d.At the same time one has to understand the limitations of SMEs. coupled with WTO regime. Agricultural Inputs c. competitive spirit and willingness . Those SMEs who have strong technological base. Meat products i. Electro-medical equipment f. the SMEs have made significant contribution towards technological development and exports. Electricals. Food Processing b. Sports goods k. With slowing down of economy in India and abroad. Bio-engineering j. SMEs have been established in almost all-major sectors in the Indian industry such as: a. Engineering. which are: (i) Low Capital base (ii) Concentration of functions in one / two persons (iii)Inadequate exposure to international environment (iv) Inability to face impact of WTO regime (v) Inadequate contribution towards R & D (vi) Lack of professionalism In spite of these limitations.
the heterogeneity and the unorganised nature of the Indian MSMEs are important aspects that need to be factored into policy making and programme implementation. more than 94 per cent of MSMEs are unregistered.5%). MSMEs are important for the national objectives of growth with equity and inclusion. The MSMEs provide employment to about 60 million persons through 26 million enterprises. The MSME sector in India is highly heterogeneous in terms of the size of the enterprises. The role of micro. a Task Force under the chairmanship of the Principal Secretary to Prime Minister was constituted to address the issues of the MSME Sector. chemical and chemical products (7. textiles and readymade garments (14. The Prime Minister announced the setting up of a Task Force to reflect on the issues raised by the associations and formulate an agenda for action within a period of three months after discussions with all stakeholders. transport equipments (4. paper and paper products (2. The representatives of 19 prominent MSME Associations met the Hon’ble Prime Minister on 26th August 2009 to highlight their concerns and issues regarding MSMEs. The MSME sector is a nursery of entrepreneurship. metal products (7.62%). The geographic distribution of the MSMEs is also more even. Accordingly.05%). furniture (2.03%) and leather and leather products (1. basic metal (8. 45 per cent of the manufactured output and 40 per cent of its exports. MSMEs in the country manufacture over 6. 3. The labour to capital ratio in MSMEs and the overall growth in the MSME sector is much higher than in the large industries. with a large number established in the informal or unorganized sector. rubber and plastic products (3.9%). variety of products and services produced and the levels of technology employed.97%).to restructure themselves shall withstand the present challenges and come out with shining colours to make their own contribution to the Indian economy.35%). often driven by individual creativity and innovation. 2.81%). . This sector contributes 8 per cent of the country’s GDP. While one end of the MSME spectrum contains highly innovative and high growth enterprises. small and medium enterprises (MSMEs) in the economic and social development of the country is well established. Some of the major subsectors in terms of manufacturing output are food products (18.98%). machinery and equipments (6. Thus.52%). Besides the growth potential of the sector and its critical role in the manufacturing and value chains.000 products.55%).
the Government has emphasized on its growth and development. there is almost negligible flow of equity capital into this sector despite the fact that overall such capital inflow has witnessed significant increase in the recent years. The Government has launched the National Manufacturing Competitiveness Programme with the objective of enhancing the competitiveness of MSMEs. Such enterprises not only have high potential for growth but could also contribute significantly in enhancing country’s exports.In view of the MSME sector’s role in the economic and social development of the country. These could be broadly grouped into the following three categories. The programme includes several new and innovative . etc. paper. Small and Medium Enterprises Development Act. leather and leather products. variety of products and services produced the levels of technology employed. The MSME sector in India is highly heterogeneous in terms of the size of the enterprises. IT hardware and electronics. etc. food processing. These include MSMEs in sectors like textiles and garments. therefore. auto components. launching of Prime Minister’s Employment Generation Programme (PMEGP) to generate employment opportunities. One of the major constraints in growth of such enterprises is access to equity capital. a need to promote inflow of equity capital into this sector by providing suitable incentives to MSMEfocused angel/venture capital funds as well as by setting up of SME Exchanges/platforms. drugs and pharmaceuticals. etc. launching of new/innovative schemes under National Manufacturing Competitiveness Programme Report of The Task Force on MSME (NMCP). It has taken various measures/initiatives from time to time which have facilitated the sector’s ubiquitous growth. amendments to the Khadi and Village Industries Commission Act. There is. chemicals and petrochemicals. announcement of a Package for Promotion of Micro and Small Enterprises (MSEs). At present. based on the different sets of constraints faced and requirements of policy interventions: (a) High Growth Enterprises One end of the MSME spectrum contains highly innovative and high growth enterprises. Another aspect that is critical for their growth is technology. Given their scale of operations. telecom equipment. it is not only difficult for them to invest in research and development activities but even to acquire modern and latest technologies available in the market due to high costs. 2006. Some of the recent measures include enactment of the Micro.
The field survey consisted of visits to industries in the following cities / regions: . Quality Management Standards and Quality Technology Tools. Some of them have acquired technology from abroad.. In addition. etc. In view of the objective of the study. Many units are promoted by techno-entrepreneurs. Simultaneously. Chemicals and Pharmaceuticals. Many SMEs promoted by local entrepreneurs as also by NRIs and foreigners have come up in Uttrakhand covering a broad spectrum of industrial activity. the Government also needs to encourage R&D in the engineering/technical institutions through suitable tax incentives and setting up of Business Incubators. 1. Adequate budget is provided for R & D operations. The state has always followed progressive industrial policies and industry – friendly measures. Design Clinics. Through a network of District Industries Centre (DICs). it offers maximum guidance and assistance to SMEs. The quality of products of SMEs from Uttrakhand is high. Incubators. adaptation and innovation. Lean Manufacturing. it was considered necessary to undertake a survey of SMEs from major parts of Uttrakhand covering following sectors: Engineering. Electricals.schemes (viz. (and even earlier as a part of ‘Uttar pradesh State’) Uttrakhand has been in the forefront of industrialization. there is a need to make massive efforts for dissemination of information on the latest/modern technologies among the MSMEs and supporting them for undertaking technology upgradation.3 SMEs In Uttrakhand Since its inception in May 1999.) for assisting the MSMEs in adoption of best international practices to enhance their competitiveness. Food Processing. acquisition.
Govt. of Uttarakhand .Table : 1.1 District-wise Industries (2008-2010) District Nainital Udham Singh Nagar Almora Pithoragarh Bageshwar Champawat Dehradun Pauri Tehri Chamoli Uttarkashi Rudraprayag Haridwar Uttarakhand Target Achievement (Upto july-2010) 175 300 200 150 50 50 250 200 175 140 140 50 300 2180 71 62 170 82 23 43 65 119 56 52 95 39 204 1081 %age Achievement 41 21 85 55 46 86 26 60 32 37 68 78 68 50 Number (Less of than Capital ten Investment Lakh) in Small Scale Uttarakhand Source Table 1.1 : Industrial Development Department.
2 : Industrial Development Department.2 District-wise Number of Capital Investment Small Scale Industries (More than Ten Lakh) in Uttarakhand (2007-2010) Achievement (Upto July2010) 50 % age Achievement 83 District Target Nainital Udham Singh Nagar Almora Pithoragarh Bageshwar Champawat Dehradun Pauri Tehri Chamoli Uttarkashi Rudraprayag Haridwar Uttarakhand 60 100 85 85 40 40 25 25 95 80 60 40 40 30 100 735 36 36 23 23 80 68 50 33 34 29 83 630 90 90 92 92 84 85 83 83 85 97 83 86 Source Table 1. Govt. of Uttarakhand .Table 1.
of Uttarakhand .3 District-wise Number of Registered Small Scale Industries in Uttarakhand (2000-2010) District Uttarkashi Chamoli Rudraprayag Tehri Dehradun Pauri Haridwar Pithoragarh Bageshwar Almora Champawat Nainital Udham Singh Nagar Uttarakhand No. Govt. of Total Unit Working Unit in Consist Closed Unit 2655 1712 656 2090 4191 3368 4241 1083 665 1926 366 1897 2535 27385 1839 954 422 1158 2527 1776 2622 604 403 1016 165 835 961 15282 816 758 234 932 1664 1592 1619 479 262 910 201 1062 1574 12103 Source Table 1.Table 1.3 : Industrial Development Department.
Engineering. are presented in the following sections. Food Processing and Pharmaceutical sector were contacted during the field survey. Set up of the unit and management 2. Technology status and product profile 3. . Technology / Process / Product on offer 1.4 Review of Industrial sectors considered for SMEs in Uttrakhand The industries in Chemical.A total of 40 units in various sectors were contacted and finally 23 units were shortlisted for inclusion in the study report. Electrical. 1. Scientific manpower 5. following factors were considered. which were considered for detailed study. Turnover & exports 4. While making a final choice of the units from target sectors. A broad outline of these industrial sectors and the list of industries.
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