PROJECT REPORT

(SUBMITTED FOR THE DEGREE OF B.COM HONOURS IN

ACCOUNTING & FINANCE UNDER THE UNIVERSITY OF
CALCUTTA)

TITLE OF THE PROJECT

ROLE OF MICRO, SMALL, AND MEDIAM (MSME) IN THE INDIAN
ECONOMIC DEVELOPMENT

SUBMITTED BY
NAME OF THE CANDIDATE: MINAKSHI PRAMANICK
CU REGISTRATION NUMBER: 223-1212-0439-19
CALCUTTA UNIVERSITY ROLL NUMBER: 191223-11-0006
NAME OF THE COLLEGE: SCOTTISH CHARCH COLLEGE
COLLEGE ROLL NUMBER: 19C-018

SUPERVISED BY
NAME OF THE SUPERVISOR: DEBARATI BANERJEE
NAME OF THE COLLEGE: SCOTTISH CHARCH COLLEGE

1
 APPENDIX 1

SUPERVISOR’S CERTIFICATE

This is to certify that MS. Minakshi Pramanick a student of B.COM. Honours

in Accounting and Finance of Scottish Church College under the University
of Calcutta has worked under my supervision and guidance for her project report
with the title Role of MSME in the Indian Economy Development which she
is submitting, is her genuine and original work to the best of my knowledge.

Place: KOLKATA signature:

Date: name:
Designation:
Name of the college:

2
 APPENDIX:2

DECLARATION

I hereby declare that the project ROLE OF MSME IN INDIAN ECONOMIC

DEVELOPMENT is based on my own work carried out during the course of our study
under the supervision of MS. DEBARATI BANERJEE and submitted to Scottish
Church college, Kolkata under University of Calcutta.
I assert the statements made and conclusion drawn are an outcome of my research work. I
further certify that
I. The work contained in the report is original and has been done by me under the
general supervision of my supervisor.
II. The work has not been submitted to any other institution for any other degree/
diploma/ certificate in this university or any other university of India or abroad.
III. I have followed the guidelines provided by the university of Calcutta in writing the
report.
IV. Whenever we have used materials (data, theoretical analysis, and text) from other
sources, we have given due credit to them in the text of the report and giving their
details in the references/Bibliography.

Date:
Place:
……………………………..
(Signature of the candidate)

3
 ACKNOWLEDGEMENT

I would like to express my gratitude towards guest lecturer Ms. DEBARATI BANERJEE
For guiding me throughout the project. I also feel thankful and express my gratitude
towards our principal Mrs. Madhurima Mondal and also like to express my gratitude
towards our head of the department (HOD) Prof. Amitava Chatterjee for allowing me to
conduct Role of MSMEs in Indian economy development project. The mentioned project
was done under the supervision of
I would like to extend my deep appreciation to all my classmate, without their support and
coordination we would not have been able to complete this project.
Finally, I would like to thank my parents who helped me a lot in finishing this project.
I am ensuring that this project was done by me and not copied from anywhere.

MINAKSHI PRAMANICK

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 CONTENTS
CHAPTER TOPICS PAGE
NUMBER NUMBER
1. INTRODUCTION

1.1 Background of the study 7

1.2 Emergence of MSME 9
1.3 Review of literature 10-11
1.4 Objective of the study 12
1.5 Data methodology 12
1.6 Research design 12
1.7 Limitation of the study 12

2. THEORETICAL FRAMEWORK

2.1 Definition 14-15

2.2 Roles or importance of MSME 15-17
2.3 Features of MSME 17

3. DATA, ANALYSIS AND FINDINGS

3.1 Overview of MSME sector in India 19-22

3.2 Recent developments of MSME 22-26
3.3 State wise distribution of enterprises 26-27
3.4 State wise distribution of employment 27-28
in MSME sector

4. CONCLUTION 29
5. BIBLIOGRAPHY 30-31

5
 CHAPTER:1

INTRODUCTION

6
1.1 BACKGROUND OF THE STUDY
The Ministry of Small-Scale Industries and Agro and Rural Industries was created in October
1999. In September 2001, the ministry was split into the Ministry of Small-Scale Industries
and the Ministry of Agro and Rural Industries. The president of India amended the Government
of India (Allocation of Business) Rules, 1961, under the notification dated 9 May 2007.
Pursuant to this amendment, they were merged into a single ministry.
The ministry was tasked with the promotion of micro and small enterprises The Small
Industries Development Organisation was under the control of the ministry, as was the Nation
small industry’s corporation Limited public sector undertaking.
The Small Industries Development Organisation was established in 1954 on the basis of the
recommendations of the Ford Foundation. It has over 60 offices and 21 autonomous bodies
under its management. These autonomous bodies include Tool Rooms, Training Institutions
and Project-cum-Process Development Centres.
services provided include:
 Facilities for testing, tormenting, training for entrepreneurship development
 Preparation of project and product profiles
 Technical and managerial consultancy
 Assistance for exports
 Pollution and energy audits

It also provides economic information services and advises Government in policy formulation
for the promotion and development of SSIs. The field offices also work as effective links
between the Central and State Governments.

MSME stands for Micro, Small, and Medium Enterprises. It was introduced by the Government
of India in agreement with the MSMED (Micro, Small, and Medium Enterprises Development)
Act of 2006. As per this act, MSMEs are the enterprises involved in the processing, production,
and preservation of goods and commodities.
The Micro, Small and Medium Enterprises (MSME) sector has emerged as a highly vibrant
and dynamic sector of the Indian economy over the last five decades. It contributes significantly
in the economic and social development of the country by fostering entrepreneurship and
generating large employment opportunities at comparatively lower capital cost, next only to
agriculture. MSMEs are complementary to large industries as ancillary units and this sector
contributes significantly in the inclusive industrial development of the country. The MSMEs
are widening their domain across sectors of the economy, producing diverse range of products
and services to meet demands of domestic as well as global markets. On 9 May 2007, the
erstwhile 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 (M/o MSME).
According to Micro, Small and Medium Enterprises Development (MSMED) Act, 2006
the MSME can be dividing into two parts-
 MANUFACTURING UNITS
 SERVICE UNITS

7
The MSMED Act further sub divides manufacturing enterprises and service enterprises on the
basis of amount of investment made in plant and machinery for manufacturing enterprises and
the amount of investment in equipment for service enterprises.

TYPES OF MANUFACTURING SERVIVE

ENTERPRISES TURNOVER INVESTMENT TURNOVER INVESTMENT
MICRO Rs.5 crore Less than Rs.25 Rs.5 crore
Less than Rs. 10
(US$ 0.6 lakh (US$ 0.03 (US$ 0.6
lakh (US$ 0.01
million) million) million) million)
SMALL Rs.50 crore More than Rs.25 Rs.50 crore More than Rs. 10
(US$ 6.8 lakh (US$0.03 (US$ 6.8
lakh (US$ 0.01
million) million) but less million) million) but less
than Rs.5 crore than Rs. 2 crore
(US$0.6 million) (US$ 0.3 million)
MEDIAM Rs.250 crore More than Rs.5 Rs.250 crore More than Rs.2
(US$ 34 crore (US$ 0.6 (US$ 34 crore (US$ 0.3
million) million), but less million) million), but dose
than Rs.10 crore not exceed Rs.5
(US$ 1.4 million) crore (US$ 0.6
million)

At present, India has approximately 6.3 crore MSMEs. As per the MSME Ministry data, as of
October 21, 2021, the Udyam Registration portal registered 53,33,323 MSMEs, replacing the
former process of filing for an Udyog Aadhaar Memorandum (UAM). Registered micro-
enterprises stood at ~47 lakh (94%), followed by small enterprises at 2.7 lakh (5%) and
midsized enterprises at 40,062 (1%). As of October 2021, under the top five state-wise Udyam
registrations, Maharashtra recorded maximum number of registrations with 11.29 lakh units,
followed by Tamil Nadu (5.75), Gujarat (4.57), Rajasthan (4.39) and Uttar Pradesh (4.10). New
online system of MSME/Udyam Registration launched by the Union MSME Ministry, w.e.f.
July 01, 2020, successfully registered >1.1 million MSMEs until November 2020. Aero India
2021 resulted in orders worth Rs. 203 crore (US$ 27.76 million) for 45 MSMEs that
participated in the event. In June 2021, the Ministry of Micro, Small and Medium Enterprises
extended the validity of Udyog Aadhaar Memorandum from March 31, 2021, to December 31,
2021. As of June 25, 2021, Gem portal has served 6.87 million orders worth Rs. 116,291 crore
(US$ 15.67 billion) from 2.0 million registered sellers and service providers for 52,651
government buyers.
The new classification has come into effect from 1st July, 2020. The earlier criterion of
classification of MSMEs under MSMED Act, 2006 was based on investment in plant and
machinery / equipment. It was different for manufacturing and services units. It was also very
low in terms of financial limits. Since then, the economy has undergone significant changes. a
revision in MSME criteria of classification was announced in the Aatmnirbhar Bharat package
on 13th May, 2020 (‘ATMANIRBHAR BHARAT ABHIYAN’). This has been done in order
to be realistic with time and to establish an objective system of classification and to provide
ease of doing business.
A new composite criterion of classification for manufacturing and service units has been
notified on 26.06.2020, with guidelines regarding composite criteria to facilitate the present
and prospective entrepreneurs. Now, there will be no difference between manufacturing and

8
service sectors. Also, a new criterion of turnover has been added in the previous criteria of
classification based only on investment in plant and machinery. The new criteria are expected
to bring about many benefits that will aid MSMEs to grow in size. It has also been decided that
the turnover with respect to exports will not be counted in the limits of turnover for any
category of MSME units whether micro, small or medium. This is yet another step towards
ease of doing business. This will help in attracting investments and creating more jobs in the
MSME sector. The change in criteria of classifying the MSMEs is set to offer major relief to
the exporters. With this change in criteria of classification of MSMEs the Government has also
done away with the difference between manufacturing and services.
A number of statutory and non-statutory bodies work under the aegis of the Ministry of MSME.
These include the Khadi and Village Industries Commission (KVIC) and the Coir Board
besides National Small Industries Corporation (NSIC), National Institute for Micro, Small and
Medium Enterprises (NIMSME) and Mahatma Gandhi Institute for Rural Industrialisation
(MGIRI).
The Ministry of MSME runs various schemes aimed at financial assistance, technology
assistance and upgradation, infrastructure development, skill development and training,
enhancing competitiveness and market assistance of MSMEs
The Ministry is committed towards an agenda of inclusive development, and has taken various
initiatives and measures to ensure that demographically as well as geographically weaker
sections benefit from its work also committed towards the progressive use of Official Language
“Hindi” in all the attached Offices under the M/o MSME. Besides this, continuous measures
on Vigilance, RTI, Prevention of Sexual harassment.

1.2 EMERGENCE OF MSME

1948-1991…
In all the policy resolution from 1948 to 1991, recognition was given to the micro and small
enterprise, termed as an efficient tool to expand employment opportunity, help ensure equitable
distribution of the national income and facilitate efficient mobilization of private sector
resource of capital and skills. The Micro, Small and Medium Enterprises Development
Organization [earlier known as Small Industries Development Organisation (SIDO)] was set
up in 1954.
1991-1999…
The new policy for Small, Tiny and Village Enterprises of August, 1991 laid the framework
for government support in the context of liberalization, which sought to replace protection with
competitiveness to infuse more vitality and growth to MSME in the face of foreign competition
and open market.
1999 onwards…
The Ministry of MSME [ earlier known as Ministry of Small-Scale Industries and Agro and
Rural Industries (SSI & ARI) came into being from 1999 to provide focused to the development
and promotion of the sector.

9
1.3 REVIEW OF LITERATURE:
 Malhotra.et.al (2017) small firms’ difficulties like inadequate access to financial
services, distortion of financial sector policy, inadequate bank knowledge, inadequate
audited financial statements, high risk associated to SMEs lending.
 Sia, Manuel and Donna Nails, (2018) the micro and small entrepreneurs have small
capital base, they are dependent on personal and relatives. In the developing countries
in the phase of startup, entrepreneurs are dependent on informal source of funding and
experiences the basic problems that is mismanagement in the cash flow.
 Yesseleva, (2010) majority of entrepreneurs are not satisfied with the service provided
by financial institution. Because of high cost, entrepreneurs are not switching from
financial institutions.
 Naidu and Chand, (2011) Micro, Small and Medium Enterprises faces the various
challenges like inadequate collateral, poor preparation of accounts, poor cash
management, unable to obtain internal and external finance, inadequate capital and high
cost of startup.
 Tauringana and Afrifa, (2013) working capital management is the major challenge for
micro and small enterprise.
 Berger and Udell, (2002) researchers found that there has been huge reduction in the
credit facilities provided to micro, small and medium enterprises.
 Sandhu, Hussain and Matlay, (2012) women entrepreneurs have low risk-taking ability.
Women entrepreneurs commence business with low level of capitalization and debt
finance and does not utilize private equity for the sustainability of business. Women are
not involved in banking activities due to illiteracy and cumbersome procedure of bank.
Banks are not interested in providing loan because of low credit worthiness, high
interest rates, non-existence of past history of credit, credit bearing capacity is low, not
healthy relationship with banks for availing bank loans. Women entrepreneurs do not
have the knowledge of financial assistance that is incentives, subsidies, tax relief etc.
which leads to business failure. Women entrepreneurs are dependent on small personal
savings, loan taken by family, friends which are not enough for sustainability of
business.
 Tambi, (2013) repayment problem is more serious than availability of finance. The
procedure of repayment of financial liabilities are stressful and are not encouraging
because of low sales and paying capacity.
 Vijayakumar and Naresh, (2013) the problem of finance is related to inadequate
finance, difficulties arise in getting credit from bank, low capacity of bearing risk,
unable to expand due to inadequate capital, problem in capital for expansion,
unawareness of suitable source of finance, inadequate collateral security, cumbersome
procedure for availing loan. Women entrepreneurs suffer from lack of finance
resources. Entrepreneurs are not able to avail loan due to low credit-worthiness and lack
of collateral and bank balance.
 Srinivas K T, 2013 studied the performance of micro, small and medium enterprises,
their contribution in India’s economic growth, identified the number of enterprises,
employment in MSMEs and concluded that MSMEs play a significant role in inclusive
growth of Indian economy.
 Kumar and Kumar, (2014) Small and women entrepreneurs face the problem of lack of
financial resources and working capital. They have inadequate external funds because
of lack of collateral security and credit in the market. Women are not having properties
on their name that’s why they lack security for availing loan. Women do not understand

10
 the difficult and complicated formalities of bank loans, time taking process in obtaining
loans and huge transaction cost involved makes women difficult in getting loans and in
becoming successful entrepreneurs.
 Export-Import Bank of India, (2012) studied and documented the current situation of
MSMEs and support systems setup for them in India along with select countries of
Europe, Asia, Latin America etc. It studies MSMEs in the Indian as well as global
context. It explains the evolution of Indian MSME policies over time. During 1948-
1990 the objective was to increase employment opportunities and equitable distribution
of national income, during 1991-1999 it was to make the MSMEs more competitive in
the face of liberalisation and 1999 onwards the objective has been development and
promotion of the sector by addressing challenges relating to credit, infrastructure,
marketing and technology. It also stated the current challenges faced by the Indian
MSMEs and the strategies for their Development based on past experiences of India
and other countries such as China, Japan, Malaysia, Thailand, Mexico, Philippines etc
. It suggests that Indian MSMEs must have access to alternative sources of capital like
angel funds/risk capital etc, the existing legislatures need to be toned up to handle
insolvencies and bankruptcies; the ceiling limits need to be redefined to encourage
MSMEs to move up the value chain; the policies need a cluster development approach
to increase the level of competitiveness; emulating Japan, Korea and Malaysia
technological innovation and R&D must be encouraged among MSMEs and
entrepreneurship must be encouraged via skill formation and learning mechanisms.
 Grimsholm & Poblete, (2010) conducted a detailed qualitative study of external and
internal factors hampering the growth of Small and Medium Enterprises in Thailand. It
reproduced quite generalized results applicable to most of the south Asian countries
producing low cost, low value added and labour-intensive products. Significant 10 | P
a g e factors hampering growth according to the study are lack of access to finance,
competition, barriers to trade, management competence, lack of skilled labour, low
investment in R&D and new technology. Ministry of Micro, Small and Medium
enterprises, 2013 published the Inter-Ministerial Committee for Accelerating
Manufacturing in MSMEs’ paper reporting slow-down in the overall growth of MSMEs
in recent years, especially post 2009. It highlighted the significance of MSMEs,
changing trends in employment growth in this sector and addressed concerns regarding
establishing an enterprise and running it successfully. It also recommended support
systems for encouraging start-ups, doing and expanding business and ease of closure
and exit and also drew light on the need to do so. It also suggested changes in labour
laws and gives product specific recommendations.
 Siddiqui, (2015) the various problems of financing are high credit cost, insufficient
working capital, unable to recover money from debtors, adequate and timely credit is
not available, lack of collateral requirement. For availing loan paper work is excessive
used in financial institutions.
 Siddiqui, (2018) during early growth stage micro, small and median enterprise need
timely and sufficient capital. MSMEs rely on various sources of finance. Various
financial problems are inadequate and non-timely credit, limited knowledge and capital,
collateral security requirement, not sufficient working capital, recovery form debtors,
for availing loan from financial institution excessive paper work is required.
 Nagaraju, et al (2019) in their journal “THE CONTRIBUTION OF MSMEs TO THE
GROWTH OF THE INDIAN AND GLOBAL ECONOMY” emphasised on
contribution of GDP growth, employment generation and export of India.

11
1.4 OBJECTIVE:
 Give an overview of MSME sector.
 To analysis state wise number of MSME registered under Udyam Registration
 To give a trend wise analysis on GVA and GDA
 To understand the scenario of MSME

1.5 DATA METHODOLOGY:

This study mainly focused on the role of Micro, Small and Medium Enterprises
in the Indian economic development.
TOOLS FOR THE STUDY
Two types of research methods most commonly used for data collection are as
follows: quantitative and qualitative methods.
This paper used the qualitative approach as it is more suitable for research like
this.
TYPE OD DATA
Secondary data will be used for this project

1.6 RESEARCH DESIGN:

The study is based on secondary data that has been proposed collected from
various papers, annual reports of MSME department. The time period of study
for examining the factor responsible for the growth of MSME in India is from
the financial year :2011-2021.

1.7 LIMITATION OF THE STUDY:

 The study mainly focused on the growth of GDP.
 The time period of the study is mainly between 2011-2022.
 The study only focused on the past analysis of data.

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 CHAPTER:2

THRORETICAL
FREMEWORK

13
2.1 DEFINATION OF MSME:

MICRO ENTERPRISES:
 Micro enterprises generally small refers to a small business employing 10
people or less
 It is an enterprise in which investment is between 5 lakhs to 25 lakhs.
 works an operates not by choice but out of necessity.
SMALL ENTERPRISES:
 Small enterprises generally small refers to a small business employing 50
people or less.
 It is an enterprise in which investment is between 25 lakhs to 5 crores.
 Works an operates to earn a small amount of profit.
MEDIUM ENTERPRISES:
 Medium enterprise refers to a business employing maximum to 250 employees.
 It is enterprise in which investment in plant and machinery is between 5 crores
to 10 crores.
 These enterprise works and operates to earn a fair number of profits to
increase their standard of living.
In case of above enterprise, investment in plant and machinery is the original cost
excluding land and building and the items specified by Ministry of Small-Scale
Industries vide its notification No.S.O.1722(E) dated October 5, 2006.
Enterprises engaged in providing or rendering of services and whose investment in
equipment (original cost excluding land and building and furniture, fittings and other
items not directly related to the service rendered or as may be notified under the
MSMED Act, 2006 are specified below.
MICRO ENTERPRISE:
 A micro enterprise is an enterprise where the investment does not exceed Rs.10
lakhs.

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 SMALL ENTERPRISE:
 A small enterprise is an enterprise where the investment in equipment is more
then Rs.10 lakhs but does not exceed Rs. 2 crores.
MEDIUM ENTERPRISE:
 A medium enterprise is an enterprise where the investment in equipment is
more than Rs.2 crore but does not exceed Rs.5 crore.

2.2 ROLES OR IMPORTENCE OF MSME

Small scale industries and the ministry of Agro and Rural Industries; the Ministry of Micro,
Small and Medium Enterprises (M/O MSME) was formed.
MSMEs produce and manufacturing a wide variety of products of domestic, as well as
international markets. MSME help in the promotion of growth and development of Khadi,
Village, and Coir Industries, in cooperation with concerned ministries, state government,
stakeholders.
MSMEs are an important sector for the Indian economy and have contributed immensely to
the country’s socio-economic development. It not only generates employment opportunities
but also works hand-in-hand towards the development of the nation’s backward and rural areas.
At present, India has approximately 6.3crore MSME.
The number of MSME sector in India increased by a CAGR of 18.5% from 2019-2020.
EMPLOYMENT OPPORTUNITIES
SSI Sector in India creates largest employment opportunities for the Indian population, next
only to Agriculture. It has been estimated that a lakh rupee of investment in fixed assets in the
small-scale sector generates employment for four persons. MSMEs not only play crucial role
in providing large employment opportunities at comparatively lower capital cost than large
industries but also help in industrialization of rural & backward areas, thereby, reducing
regional imbalances, assuring more equitable distribution of national income and wealth. It is
estimated to employ about 60 million persons in over 26 million units throughout the country.
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
maximum opportunities for both self-employment and wage-employment, outside agriculture
sector. MSME sector contributes not only to higher rate of economic growth but also in
building an inclusive and sustainable society in innumerable ways through creation of nonfarm
livelihood at low cost, balanced regional development, gender & social balance,
environmentally sustainable development and to top it all, recession proofing of economic
growth, which the sector has proven time and again.

15
COMPETITIVE TECNOLOGY
In today's fast paced global business scenario, technology has become more vital than ever
before. With a view to foster the growth of MSME sector in the country, Government has set
up ten state-of-the-art Tool Rooms and Training Centres. These Tool Rooms provide
invaluable service to the Indian industry by way of precision tooling and providing well trained
craftsmen in the area of tool and die making. These Tool Room are highly proficient in mould
and die making technology and promote precision and quality in the development and
manufacture of sophisticated moulds, dies and tools. The Tool Rooms is not only equipped
with the best technology but are also abreast with the latest advancements like CAD/CAM,
CNC machining for tooling, Vacuum Heat Treatment, Rapid Prototyping, etc. The Tool Room
& Training Centres also offer various training programmes to meet the wide spectrum of
technical manpower required in the manufacturing sector. The training programmes are
designed with optimum blend of theory and practice giving the trainees exposure on actual jobs
and hands on working experience. The Tool Rooms have also developed special training
programmes to meet the requirements at international level, which are attended by participants
from all over the globe.

EXPORT PROMOTION
Export promotion from the MSE sector has been accorded a high priority. To help MSEs in
exporting their products, the following facilities/incentives are provided: (i) Products of MSE
exporters are displayed in international exhibitions and the expenditure incurred is reimbursed
by the Government; (ii) To acquaint MSE exporters with latest packaging standards,
techniques, etc., training programme on packaging for exporters are organised in various parts
of the country in association with the Indian Institute of Packaging; (iii) Under the MSE
Marketing Development Assistance (MDA) Scheme, assistance is provided to individuals for
participation in overseas fairs/ exhibitions, overseas study tours, or tours of individuals as
member of a trade delegation going abroad. The Scheme also offers assistance for (a) sector
specific market study by MSE Associations/Export Promotion Councils/Federation of Indian
Export Organisation; (b) Initiating/contesting antidumping cases by MSE Associations; and (c)
reimbursement of 75 per cent of the onetime registration fee and annual fee (recurring for first
three years) charged by GSI India (formerly EAN India) for adoption of Bar Coding.

INFRASTRUCTURE DEVELOPMENT
For setting up of industrial estates and to develop infrastructure facilities like power distribution
network, water, telecommunication, drainage and pollution control facilities, roads, banks, raw
materials, storage and marketing outlets, common service facilities and technological back up
services, etc., for MSMEs, the Integrated Infrastructural Development (IID) Scheme was
launched in 1994. The scheme covers rural as well as urban areas with a provision of 50 percent
reservation for rural areas and 50 per cent industrial plots are to be reserved for the micro
enterprises. The Scheme al so provides for upgradation/strengthening of the infrastructural
facilities in the existing industrial estates. The estimated cost (excluding cost of land) to set up
an IID Centre is Rs.5 crore ($1.25 million). Central Government provides 40 per cent in case
of general States and up to 80% for North East Region (including Sikkim), J&K, H.P. and

16
Uttarakhand, as grant and remaining amount could be loan from SIDBI/Banks/Financial
Institutions or the State Funds. The IID Scheme has been subsumed under the Micro and Small
Enterprise Cluster Development Programme (MSECDP). All the features of the IID Scheme
have been retained and will be covered as “New Clusters” under MSECDP.

Across the globe, MSME are accepted as a means of economic growth and
promoting equitable development. They are known to generate the highest rate of
growth in the economy. MSMEs have been driven India to new heights through
requirements of low investment, flexible operations, and the capacity to develop
appropriate native technology
1. MSME employ around 120 million people, becoming the second-largest
employment generating sector after agriculture.
2. With approximately 45 lakh units throughout the country, it contributes
about 6.11% of GDP from manufacturing and 24.63% of the GDP from
service activities.
3. MSME ministry targets to increase its contribution towards GDP by up to
50% by 2025 as India moves ahead to become a $5 trillion economy.
4. Contributing around 45% of overall Indian exports.
5. MSMEs promote all-inclusive growth by providing employment
opportunities, especially to people belonging to weaker sections of the
society in rural areas.
6. MSMEs promote innovation by providing an opportunity to budding
entrepreneurs to help then build creative products and boost competition in
the business and fuel growth.

2.3 FEATURES OF MSME

 Works for the welfare of artisans and workers. MSMEs work to improve the lives of
employees and artisans. They assist them by providing jobs, loans and other services.
 They encourage the growth of entrepreneurship as well as the upgrading of skills by
establishing specialized training centres.
 Provided credit limit or funding support from banks.
 Promotes entrepreneurship development and skills up-gradation via specialized training
centres.
 They are in favour of improving development technology, expanding infrastructure,
and modernizing the sector as a whole.
 Offers assistance for improved access to domestic and export markets.
 Provides modern testing facilities and quality certification.
 MSMEs are also supporting product creation, concept creativity, engagement, and
packing, in line with recent trends.

17
 CHAPTER:3

DATA
ANALYSIS
AND
FINDINGS

18
3.1 OVERVIEW OF THE MSME SECTOR IN INDIA:
The Ministry of MSME consists of Small & Medium Enterprises (SME) Division, Agro
&Rural Industry (ARI) Division, Administration & Financial Institutions (AFI), Integrated
Finance (IF) Wing and Data Analytics and Technical Co-ordination (DATC) Wing, besides the
Office of the Development Commissioner (DCMSME) as an attached office and other
subordinate organisations. The organisational structure of the Ministry is depicted in the
following organogram.

The Micro, Small & Medium Enterprises (MSMEs) have been contributing significantly to the
expansion of entrepreneurial endeavours through business innovations. The MSMEs are
widening their domain across sectors of the economy, producing diverse range of products and
services to meet demands of domestic as well as global markets. The contribution of MSME
sector in gross value Added (GVA) and the Gross Domestic Product (GDP) are shows below

SHARE SHARE
MSME GROWTH TOTAL OF MSME TOTAL OF MSME
YEAR
GVA (%) GVA IN GVA GDP IN GDP
(%) (%)
2011-12 2622574 8106946 32.35 8736329 30

2012-13 3020528 15.17 9202692 32.82 9944013 30.4

2013-14 3389922 12.23 10363153 32.71 11233522 30.2

2014-15 3704956 9.29 11504279 32.21 12467959 29.7

2015-16 4025595 8.65 12566646 32.03 13764037 29.2

2016-17 4405753 9.44 13841591 31.83 15253714 28.9
2017-18 5086493 12.98 15513122 32.79 17098304 29.75
2018-19 5741765 12.88 17139962 33.50 18971237 30.27
Source: Annual Report of MSME, 2018-19.

GROSS VALUE ADDED(GVA): “Gross Value-Added measures the value of

goods and services produced in an area, industry or sector of an economy.”
GROSS DOMESTIC PRODUCT (GDP): “Gross Domestic Product can be
defined by the market value of final goods and services produced within the
domestic territory of the nation at a particular period of time.”
GVA=GDP+ Subsidies on product – Taxes on product

19
ESTIMATED NUMBER OF MSME IN THE COUNTRY
The MSMEs in India are playing a crucial role by providing large employment opportunities
at comparatively lower capital cost than large industries as well as through industrialization of
rural & backward areas, inter alia, reducing regional imbalances, assuring more equitable
distribution of national income and wealth. As per the National Sample Survey (NSS) 73rd
round, conducted by National Sample Survey Office, Ministry of Statistics & Programme
Implementation during the period 2015-16, there were 633.88 lakh unincorporated non-
agriculture MSMEs in the country engaged in different economic activities (196.65 lakh in
Manufacturing, 0.03 lakh in Non-captive Electricity Generation and Transmission, 230.35 lakh
in Trade and 206.85 lakh in Other Services) excluding those MSMEs registered under
(a)Sections 2m(i) and 2m(ii) of the Factories Act, 1948, (b)Companies Act, 1956 and (c)
construction activities falling under Section F of National Industrial Classification (NIC) 2008.
ESTIMATED NUMBER OF ENTERPRISE
ACTIVITY (IN LAKH)
CATEGORY
SHARE (%)
Rural Urban Total
(1) (2) (3) (4) (5)
Manufacturing 114.14 82.50 196.65 31
Electricity 0.03 0.01 0.03 0
Trade 108.71 121.64 230.35 36
Other services 102.00 104.85 206.85 33
All 324.88 309.00 633.88 100
Source: Annual report of 2021-2021.

Distribution of MSMEs by nature of activity

Other services Manufacturing

33% 31%

Electricity
0%

Trade
36%

Manufacturing Electricity Trade Other services

20
Distribution of enterprises (Rural and Urban wise)
(Numbers in lakh)
Sector Micro Small Median Total Share (%)
(1) (2) (3) (4) (5) (6)
Rural 324.09 0.78 0.01 324.88 51
Urban 306.43 2.53 0.04 309.00 49
All 630.52 3.31 0.05 633.88 100

Percentage share of Rural and Urban MSMEs

in the country(number in lakh)

49% 51%
Rural
Urban

DISTRIBUTION OF WORKERS BYGENDER IN RURAL URBAN

AREAS

SECTOR FEMALE MALE TOTAL SHARE (%)

RURAL 137.50 360.15 497.78 45

URBAN 127.42 484.54 612.10 55

TOTAL 264.92 844.68 1109.89 100

(NUMBER IN LAKH)

21
EMPLOYMENT
As per the National Sample Survey (NSS) 73rd round conducted during the period 2015-16,
MSME sector has been creating 11.10 crore jobs (360.41 lakh in Manufacturing, 0.07 lakh in
Non-captive Electricity Generation and Transmission, 387.18 lakh in Trade and 362.82 lakh in
Other Services) in the rural and the urban areas across the country.
Broad activity Employment (in lakh)
Share (%)
category RURAL URBAN TOTAL
(1) (2) (3) (4) (5)
Manufacturing 186.56 173.86 360.41 32
Electricity 0.06 0.02 0.07 0
Trade 160.64 226.54 387.18 35
Other services 150.53 211.69 362.22 33
All 497.78 612.10 1109.89 100

EMPLOYEMENT IN MSME SECTOR (NATURE OF

ACTIVITY WISE)

OTHER SERVICES MANUFACTURING

ELECTRICITY
MANUFACTURING

ELECTRICITY

TRADE TRADE

OTHER SERVICES

22
3.2 RECENTS DEVELOPMANTS OF MSME:
UDIYAM REGISTRATION: Udyam Registration: This Ministry, vide notification
no. S.O.2119 (E) dated 26.06.2020, has notified a composite criterion of classification of
MSMEs based on investment in plant & Machinery/equipment and turnover of MSMEs.
The guidelines regarding composite criteria of classification of MSMEs is available on link:
https://msme.gov.in/sites/default/files/ IndianGazzate.pdf. Based on composite criteria of
classification of MSMEs, this Ministry has replaced the erstwhile process of filing of
Udyog Aadhaar Memorandum, by ‘Udyam’ registration on a portal developed by this
Ministry. Now the existing and prospective entrepreneurs may file their ‘Udyam’
Registration online on portal: https://udyamregistration.gov.in. As on 31.12.2020 a total
number of 5,37,677 enterprises have registered under Manufacturing category whereas
8,65,058 enterprises registered under Service sector.
 The Top 5 Industrial sectors of registrations are – Food Products, Textile, Apparel,
Fabricated Metal products and Machinery & equipment’s.
 Registration without PAN is permitted up to 31.03.2021 as a transitional
arrangement.
 Similarly, Registration without GST number is also permitted up to 31.03.2021 as
a transitional arrangement.

An analysis of Udayam Registration provides a break-up of Manufacturing and Services

MSMEs. It may be noted that MSMEs in Service Sector comprise a larger proportion of
Udayam Registration as compared to those MSMEs in Manufacturing Sector. The break-up is
provided

38%
MANUFACTURING
SERVICE
62%

Share of Udayam Registration – Manufacturing and service MSMEs Registered

The distribution of Udayam Registration by Micro, Small and Medium enterprises. The total
number MSMEs registered on Udyam Registration is 35,29,084 till 30.06.2021. Micro MSMEs

23
32,79,370 (93%) while the remaining are mostly the Small Enterprises 2,21,641 (6%) with
Medium Enterprises comprising a meager of 28,073 (1%) of the total of Udayam Registration.

DISTRIBUTION OF MSME AS PER UDAYAM

REGISTRATION
SMALLMEDIUM
6% 1%

MICRO
93%
Distribution of Micro, Small & Medium enterprises as per Udayam Registration
AN ANALYSIS OF THE UDAYAM REGISTRATION SHOWS THE STATE-WISE
DISTRIBUTION
Maharashtra has the highest number of MSME with the share of 22.3%, followed by Tamil
Nadu (10.8%), Gujarat (9.1%), Rajasthan (8.3%), and Uttar Pradesh (7.7%).

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%

DISTRIBUTION OF MSME IN TOP 10 STATE

24
The graph below shows top 10 states/UTs having Udyam registration as MICRO
ENTERPRISE. It can be observed that Maharashtra has the highest number of Micro
Enterprises with a share of 22.8%, followed by Tamil Nadu (10.9%), Gujarat (8.8%), Rajasthan
(8.5%) and Uttar Pradesh (7.8%).

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%

DISTRIBUTION OF MICRO ENTERPEISES

The graph below shows top 10 state/UTs for Small Enterprises. It can be observed that
Maharashtra has the highest number of small enterprises with a share of 16.4%. The rest
of the state are Gujarat (13.1%), Tamil Nadu (9.8%), Rajasthan (6.6%), Delhi (6.1%) and
Karnataka (5.7%)

18.00%

16.00%

14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%

DISTRIBUTION OF SMALL ENTERPRISES

25
 20.00%
18.00%
16.00%
14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%

DRISTRIBUTION OF MEDIUM ENTERPRISES

The above graph shows top 10 state/UTs for Medium enterprises. These are Maharashtra
(18.6%), Gujarat (12.9%), Tamil Nadu (8.6%), Delhi (7.3%) and Karnataka (6%).

3.3 STATE WISE DISTRIBUTION OF ESTIMATED ENTERPRISES

MSME:
State of Uttar Pradesh had the largest number of estimated MSMEs with a share of 14.20% of MSMEs
in the country. Top 10 States accounted for a share of 74.05% of the total estimated number of MSMEs
in the country. Statement No. 2.10 and Figure 2.8 show the distribution of estimated enterprises in top
ten States.
ESTIMATE NUMBER OF MSMEs
SL.NO STATE/UT
NUMBER (IN LAKH) SHARE (IN %)
1 Uttar Pradesh 89.99 14
2 West Bengal 88.67 14
3 Tamil Nadu 49.48 8
4 Maharashtra 47.78 8
5 Karnataka 38.34 6
6 Bihar 34.46 5
7 Andhra Pradesh 33.87 5
8 Gujarat 33.16 5
9 Rajasthan 26.87 4
10 Madhya Pradesh 26.74 4
11 Total of above ten states 469.36 74

26
 12 Other state/UTs 164.52 26
13 All 633.88 100

100
90
80
70
60
50
40
30
20
10
0

DISTRIBUTION OF MSMEs TOP TEN STATES

3.4 STATE WISE DISTRIBUTION OF EMPLOYMENT GENATATION

UNDER MSME:
STATE/UT FEMALE MALE TOTAL
Andhra Pradesh 21.01 34.98 55.99
Arunachal Pradesh 0.11 0.29 0.41
Gujarat 13.71 47.44 61.16
Madhya Pradesh 10.13 38.61 48.80
Panjab 4.24 20.55 24.80
Tamil Nadu 32.27 64.45 96.73
Uttar Pradesh 27.27 137.92 165.26
Uttarakhand 0.69 5.91 6.60
West Bengal 43.51 91.95 135.52
Bihar 4.79 48.26 53.07
Delhi 2.41 20.59 23.00

27
 Jammu &
1.50 9.37 10.88
Kashmir
Telangana 15.24 24.91 40.16
Odisha 8.37 24.87 33.26
Maharashtra 17.97 72.77 90.77
Source: Annual Report of MSMEs, 2019-20

180

160

140

120

100

80

60

40

20

FEMALE MALE TOTAL

BAR DIAGRAM SHOWING DISTRIBUTION OF EMPLOYMENT IN DIFFERENT

STATES

28
 CHAPTER:4

CONCLUTION
Micro, Small and Median enterprises (MSMEs) playing a very significant role in
the economy in term of balanced and sustainable growth, employment generation,
development of the entrepreneurial skills and contribution to export earnings.

It is very clear from the analysis that Micro, small and Medium Enterprises
(MSME) sector has emerged as a very important segment which is contributing
significant to employment generation, innovation, exports, and inclusive growth
of the economy. The reason is that the MSME sector has the ability to make cost
efficient products and government is also providing full support to boost up this
sector. Currently MSMEs share in national GDP is about 30.5%and the year
2019-2020 is about 30.0% and is projected to touch 50% by 2024.

MSME can be boon hope for Indian economy in near feature. The MSME is
providing uniform development to the society and can be a strong mean to utilize
the natural resources of India. The MSMEs are very helpful to remove the
regional imbalance if it establishes in the underdeveloped areas. The MSME are
providing more employment per unit. If it is the contribution is to be sustained,
then their uniqueness needs to be natured in an overt and explicit manner.

29
 CHAPTER:5

BIBLIOGRAPHY
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 Ministry of Micro, Small and Medium Enterprises - Wikipedia

(DATE: 4/3/2022)

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RT%202013-14.pdf (DATE: 4/3/2022)

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31
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 WWW.GOOGLE.COM(DATE 05/04/2022)

32