By
Bhabagrahi Sahoo
PG-13-008
Batch 2013-15
ACKNOWLEDGEMENT
S No.
Contents
Executive Summary
1. Introduction
1.1 Purpose of the Study
1.2 Industry Overview
1.2.1 MSME
2. Literature Review
3. Research Objective
4. Research Methodology
4.1 Research Design
4.2 Data Requirement
4.3 Data Collection Method and Instrument
4.5 Data Analysis and Techniques
4.5 Limitations of the Study
5. Data Analysis and Interpretation
6. Findings of the Study
7. Recommendations
8. Conclusions
9. References
EXECUTIVE SUMMARY
Page No.
4
5
08
08
08
11
12
12
12
12
13
13
13
14
18
23
24
25
The MSMEs are known as the Backbone of India after the agriculture sector. In the
current era the MSMEs are contributing about 22 percent to the nations GDP and
about 40 percent to the total exports.
The whole project is based on the secondary data collected from the annual report
of MSMEs of different years. There is very good development in the sector of
MSMEs which is possible with their self improvement and with the help of
Financial and Government.
There are many weaknesses in this sector which are creating hurdles in correct
growth of development. In every Five Year Plan government makes plans to make
the development in this sector.
1. INTRODUCTION
Indian economy has been witnessing economic deregulation in many ways since
1991. The policy makers implement the liberalization policies in all the sphere of
the economy despite strident criticism from every nook and corner of the country.
The very purpose of the loosening the economic policy is to achieve the targeted
economic growth and to cope up with the global economic needs. Employment
generation is top among the important aims. No economy can economically
sustainable until and unless it generates adequate employment opportunities to its
people. India like developing countries are concerned employment is crucial
problem which hinder the economic growth of the country. SMEs plays an
inevitable role in growth both in developing countries as well as developed
countries as SMEs have been the important source of employment generation,
output growth. In India, role of SMEs have become very crucial as SMEs have
potential to balanced distribution of income, reduction of poverty, generation of
employment and growth in export, development of entrepreneurship, development
of industry and rural economy. With over 44 million units SMEs contributes
around 9% GDP, 45% of manufacturing output, 40% of the export of the country,
SME units estimated to employ about 101million people.
SMEs help the countries having low level investment by contributing to socioeconomic benefits. SMEs had to face many challenges as well as they have got
many opportunities due to the globalization of the country. SMEs faced problems
such as lack of management efficiency, poor skill of employees, poor marketing
strategy, lack of R & D and innovative technology. Other problems faced by the
SMEs were lack of finance. There were lack of corporate governance and legal &
regulatory frameworks are also hindering the growth of SMEs.
BACKGROUND
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. 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. MSMEs are complementary to large industries as ancillary
units and this sector contributes enormously to the socioeconomic
development of the country.
Khadi is the proud legacy of our national freedom movement and
the father of the nation. Khadi and Village Industries (KVI) are two
national heritages of India. One of the most significant aspects of
KVI in Indian economy is that it creates employment at a very low
per capita investment. The KVI Sector not only serves the basic
needs of processed goods of the vast rural sector of the country,
but also provides sustainable employment to rural artisans. KVI
today represent an exquisite, heritage product, which is ethnic
as well as ethical. The Sector has a potentially strong clientele
among the middle and upper echelons of the society.
Coir Industry is an agro-based traditional industry, which
originated in the state of Kerala and proliferated to the other
coconut producing states like Tamil Nadu, Karnataka, Andhra
Pradesh, Odisha, West Bengal, Maharashtra, Assam, Tripura, etc.
It is an export oriented industry and has greater potential to
enhance exports by value addition through technological
interventions and diversified products like Coir Geotextiles etc.
The acceptability of Coir products has increased rapidly due to its
environment friendly image.
Ministry of Micro, Small & Medium Enterprises (M/o MSME)
envisions a vibrant MSME sector by promoting growth and
development of the MSME Sector, including Khadi, Village and
Coir
Industries
,
in
cooperation
with
concerned
Ministries/Departments,
State
Governments
and
other
1.2.1 MSME
1.2.1.1 Meaning of MSME
The term MSME encompasses a broad spectrum of definition and it varies from
country to country. In India it is classified under Micro, Small, and Medium
Enterprises on the basis of investment. The criteria like number of employees, sales
and investment level are commonly used internationally to define SMEs. In India
MSMEs are defined on the basis of their investment level as per MSME
Development Act 2006. Manufacturing units are classified according to their
investment in plant and machinery and service units are classified based on
investment in equipment.
The table delineates the definition of MSMEs clearly
Description
Micro
Enterprises
Small
Enterprises
Medium
Enterprises
INR(on P & M)
upto Rs. 25 Lakhs
above Rs. 25 Lakhs &
upto Rs. 5 Crores
above Rs. 5 Crores &
upto Rs. 10 Crores
INR(on services)
upto Rs. 10 Lakhs
above Rs. 10 Lakhs &
upto Rs. 2 Crores
above Rs. 2 Crores &
upto Rs. 5 Crores
No. of
employees
upto 9
10 to 49
49 to249
Food Processing
Agricultural Inputs
Chemicals & Pharmaceuticals
Engineering; Electricals; Electronics
5. Electro-medical equipment
6. Textiles and Garments
7. Leather and leather goods
8. Meat products
9. Bio-engineering
10.Sports goods
11.Plastics products
12.Computer Software, etc.
2. Literature Review
2.1
2.2
2.3
2.4
units. More support is needed for MSMEs from the government in the
form of priority sector lending, government procurement programme,
credit and performance ratings and marketing support. The policy makers
should focus on to provided possible help to the sector to utilize the
potentials of the sector and to review the sector to act as back bone of the
countrys economy and propel economic growth.
3. Research Objective
The objective of the study is to evaluate the contributions made by the SMEs
towards the GDP and Exports of Indian Economy. The study also includes the
suggestions for the improvements.
4. Research Methodology
The data for the present study have been collected from various secondary sources
especially from the annual report published by Ministry of Micro, Small and
Medium Enterprises for various years.
4.4 GDP
4.5 Total Exports
No. of Enterprises
Increase in Percentage
361.76
377.37
393.70
410.82
428.77
447.73
467.56
4.32
8.83
13.56
18.52
23.76
29.25
Gross Output
Increase in Percentage
1351383.45
1435179.26
1524235.83
1619356.53
1721553.42
1834332.05
6.20
12.79
19.83
27.39
35.74
Year
2009-10
2010-11
2011-12
Export by MSMEs
82494
111403
131483
Change in Percentage
35.04
59.38
5.5 GDP
(in crores)
Year
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
Exports
Increase in Percentage
5717.79
6558.64
8407.55
8455.34
11429.22
13829.36
14.71
47.04
47.88
99.89
141.87
GDP
MSME
3953276
4582086
5303567
6108903
7248860
8391691
1351383
1435179
1524236
1619357
1721553
1834332
Share in GDP %
34.18389
31.32153
28.73982
26.50814
23.7493
21.85891
Exports
2009-10
2010-11
2011-12
MSME
178751
251136
305964
Share in Export %
82494
111403
128978.00
46.15
44.36
42.15
xiii.
xiv.
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
Export by MSMEs
140000
120000
100000
80000
60000
40000
20000
0
2009-10
2010-11
2011-12
2012-13
2013-14
6.4 GDP
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
Share in GDP %
40
35
30
25
20
15
10
5
0
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
Share in Export %
47
46
45
44
43
42
41
40
2009-10
2010-11
2011-12
7. Recommendations
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
ix.
x.
8. Conclusions
Micro, Small and Medium Enterprises (MSMEs) have emerged as an engine of
growth in Indian economy. They have emerged as a vibrant and dynamic
component of the economy by virtue of their significant contribution to GDP and
exports. The growing importance of SMEs, which account for about one-fifth of
Indias total GDP and 42% in Exports, is manifesting itself in the economy.
Government is trying to push it forward with a number of plans to foster
technology, innovation and quality in SMEs. Banks have joined hands with private
players to create a rating agency focused on SMEs in order to improve the credit
disbursal to them. Indian SMEs are increasingly organizing themselves in clusters,
which improve their access to business associations are technical assistance
providers. It also helps in building inter-firm cooperation that adds to productivity
and innovation.
9. References
1. www.msem.gov.in , www.wikipedia.org
2. Annual Report (2013-14), Ministry of Micro, Small and Medium
Enterprises, Government of India, 2013-14.
3. Bala Subrahmanya, M.H. (2004), Small Industry and Globalization:
Implications, Performance and Prospects, Economic and Political Weekly.
4. Bargal, H., Dashmishra, M., and Sharma, A. (2009), Performance Analysis
of Small Scale Industries A Study of Pre-liberalization and Postliberalization Period, International Journal of Business and Management.
5. Dixit, A. and Panday, A.K, (2011), SMEs and Economic Growth in India:
Co integration Analysis, The IUP Journal of Financial Economics.
6. Dr. Sultan Singh Jaswal (May 2014), Problems and Prospects of Micro,
Small and Medium Enterprises (MSMEs) in India, International Journal of
Innovative Research and Studies.
7. India's SME sector, by Mr. D.R. Dogra, MD & CEO CARE Ratings, All
India Association of Industries on India SME Sector 26th February 2014.
8. SMEs role in Indias manufacturing sector, Indian Brand Equity Foundation
(IBEF), www.ibef.com
9. http://planningcommission.nic.in/data/datatable/0306/table%2013.pdf
10.http://www.dgciskol.nic.in/annualreport/book_3e.pdf