Indian MSME Sector

It is well-known that Micro, Small and Medium Enterprises (MSME) sector

provides maximum opportunities for both self employment and jobs. In the era of
globalization & liberalization; SMEs are facing cut throat competition at local,
national, international level.

To keep their position intact & sustained in a long run; in this highly competitive
market they need to implement new change & technologies. In an increasingly
competitive and globalised world, Micro, Small & Medium Enterprises (MSMEs)
need to compete more effectively to boost domestic economic activities and
contribute toward increasing export earnings.

The E-commerce can help small enterprises to present themselves to the world.
Ecommerce is emerging as a new way of helping business enterprises to compete
in the marketplace and thereby contributing to their economic success. Micro,
Small and Medium Enterprises (MSMEs) with a relatively small investments,
profits can generate good business opportunities by automating their processes
using electronic means. E-Commerce platforms like B2B Portal and B2C Portals
are playing very good role in enhancing the reach of MSMEs globally.

MSMEs are increasingly seeing the benefits arising from e-commerce as expanded
geographical coverage giving them a larger potential market into which they can
sell their products and services. Akkeren and Cavaye [1] state that e-commerce
improves an SME‟s ability to compete with larger organizations and operate on a
global scale.

They additionally see e-commerce as a tool for providing very effective ways in
which for SME‟s to plug their business, launch new product, improve
communications, gathering data and establishing potential business partners. The
web permits small businesses to enter the domain of larger business and compete
with them.

MSMEs, credited with generating the highest rate of employment after agriculture,
account for a major share in industrial production and exports. This sector accounts
for around 45% of the total manufacturing output; 40% of India‟s total exports and
contributes around 8% in India‟s Gross Domestic Product (GDP). It employs about
59 million persons in over 26 million units across the country. There are over 6000
products ranging from traditional to high-tech items, which are being manufactured
by the MSMEs in India.

The total number of MSMEs operating in India significantly increased 207% per
cent between 2000-01 and 2009-10 and the sector registered a sterling 21.52%
compounded annual growth in terms of production. The employment generating
potential of the sector has also grown at an annual compounded rate of 11.74% in
the last decade. Nearly 50% of the MSMEs are owned by disadvantaged groups of
society.

Manufacturing sector contributes around 15% in India‟s Gross Domestic Product

(GDP). In that MSME sector contributes 8% in India‟s Gross Domestic Product
(GDP) & 45% of the total manufacturing output of India.

In the National Manufacturing Competitiveness Program (NMCP), MSMEs are

under „priority sector‟. The share of manufacturing in India‟s GDP has stagnated
at 15-16% since 1980 while the share in comparable economies in Asia is much
higher at 25 to 34%. In the National Manufacturing Competitiveness Program
(NMCP), MSMEs are under „priority sector‟.

The share of manufacturing in India‟s GDP has stagnated at 15-16% since 1980
while the share in comparable economies in Asia is much higher at 25 to 34%.
The major sector contribution in SME‘s is manufacturing sector compared to
service sector as 45% industrial output and 40% total sector exports etc (Final
report of 4th All India Census of MSME, 2006-2007:Registered sector).

According to Ministry of MSME the units registered were increased to 31.2

millions in the end of financial year 2011 compared with financial year 2006-2007.

It is estimated to grow 40million by the end of 2020. Government of India has

inaugurated many institutions, associations, and schemes for development of small
and medium sectors. Among them ni-msme (National Institute of Micro Small
and Medium Enterprises) is one pertaining for promoting, development and
modernization of SME‘s sector.
Ni-msme originally set up by Central Industrial Extension Training Institute
(CIETI) in 1960 later it was renamed from Small Industry Extension Training
Institute (SIETI) to ni-msme Government of India ni-msme is governed by
Ministry of MSME India. Ni-msme (formerly as SIETI) was registered under
public societies registration act 1of 1350 on 1st July 1962.

In Andhra Pradesh ni-msme is the first institute born to promote and develop
entrepreneurs by implementing training programs, workshops, skill development
programs etc. ni-msme provides training program to both national and
international executives, existing MSME‘s and entrepreneurs. There are more
than 50 countries linked with ni-msme programs.

MSME Development institutes (MSME-DIs) and National Small Industries

Corporation (NSIC) conducted training program to 23761 persons during the
month of November 2016. NSIC provided various facility services to 352 micro
and small enterprises.

NSIC had participated in many domestic and international exhibitions in 2016

NSIC had attended 12 domestic exhibitions. All around 87000 people get trained
in the year 2015-2016. MSME promotes Indian economy in terms of
employment, generating GDP, reducing regional imbalances, providing training
facilities etc.

National Institute for Micro Small and Medium Enterprises (ni-msme) as an

autonomous body set up in the year 1960 with an initialization to promote and
encourage entrepreneurs. As per census of 2006-2007 MSME there were 45692
working registered enterprises in the state of Andhra Pradesh. A total of 119781
Entrepreneur‘s Memorandum‘s (EM‘s) and Udyog Aadhaar Memorandum
(UAM) were filled in Andhra Pradesh till 31st March 2016.

Ministry of MSME is also implementing many programs in support to

encourage entrepreneurship in India.

The programs and schemes are credit guarantee schemes, performance and
credit ranking schemes, emerging sources, competitive technology, ISO
9000/140001 certificate fee and reimbursement schemes, micro and small
enterprises cluster development programme, credit linked capital subsidy schemes,
national manufacturing competitiveness programs etc.

The growth and development of MSME sector in our country has been consistent
and remarkable over the preceding decades. Statistics show that the number of
such enterprises has increased from about 1.1 crore in 2001-02 to 4.1 crore units in
2009-10 and again to 4.48 crore enterprises in 2014-15. The MSMEs produce more
than 7,500 products and also contribute to about 35% of the India’s exports.
MSMEs contribute 8% of the country’s GDP, 45% of the manufactured output and
40% of exports (Prime Minister’s Task Force on MSME, 2010).

The Government of India has introduced several major policy initiatives for
support and promotion of micro, small & medium enterprises in the country. These
include; establishment of Small Industries Development Bank of India (SIDBI) in
1990 for promotion and financing of MSME sector, Credit Guarantee Fund Trust
of Micro and Small Enterprises (CGTMSE) was in 2000 to offer credit facilities to
eligible borrowers and the Prime Minister’s Employment Generation Programmed
(PMEGP) in 2008 to generate employment opportunities in rural and urban areas
through new self-employment ventures / projects / micro enterprises.

Available data from the Fourth All India Census of MSME in 2006-07, indicate
that around 60 % of these enterprises are based in rural areas of the country and
45% of total manufacturing output is contributed by the MSME sector. The share
of MSME sector in the total exports of India is about 40%. Statistics reveal that the
number of such enterprises set-up, employment generated and the investments
made in the MSME sector in India has shown an increasing trend over the years.