INDIAN ECONOMY

SMALL SCALE INDUSTRIES IN INDIA

Overview
  • The small scale industrial sector in India is divided into three categories: micro, small and medium. Together, they are known as Micro, Small and Medium Enterprises (MSME)
    • Micro scale sector: industries in which in the investment in plant and machinery is under Rs. 25 lakh. For service enterprises, this limit is Rs. 10 lakh
    • Small scale sector: industries in which the investment in plant and machinery is between Rs 25 lakh and Rs. 5 crore. For service enterprises, this limit is Rs 10 lakh – Rs 2 crore
    • Medium scale sector: industries in which the investment in plant and machinery is between Rs. 5 crore and Rs 10 crore. For services enterprise, Rs. 2 crore – Rs. 5 crore
  • The MSME sector in India employs about 60 million people, it is the second largest sector in terms of employment (after agriculture)
  • MSME sector accounts for 45% of industrial output and 40% of exports
  • The MSME sector in India falls under the purview of the Ministry of Micro, Small and Medium Enterprises. This Ministry was formed by the merger of the Ministry of Small Scale Industries and Ministry of Agro and Rural Industries in 2007
  • Registration of an industrial unit as a micro, small or medium scale enterprise is voluntary. However, benefits such as power and tax subsidies can only be obtained if registered
  • Registration is done by the Directorate or Commissioner of Industries for the respective states
Keywords: India, ias, upsc, civil service, study material, general studies, free
GOVERNMENTAL ORGANISATIONS IN THE MSME SECTOR
  1. Micro, Small and Medium Enterprises Development Organisation (MSME-DO)
    1. Established in 1954, headquarters New Delhi
    2. Also known as the Office of the Development Commissioner MSME
    3. It is the apex body for assisting the government for formulating and implementing policies for the MSME sector
    4. The MSME-DO provides facilities for managerial consulting, technology upgradation, quality and infrastructure improvement, and human resources training and development
    5. Functions under the Ministry of MSME
  2. National Small Industries Corporation (NSIC)
    1. Established in 1955, headquarters New Delhi
    2. Helps in the fostering, aiding and promotion of growth of MSME
    3. Focuses on the commercial aspects of operation
    4. Provides services in the areas of material procurement, product marketing, technology acquisition, improved management practices etc
    5. Functions under the Ministry of MSME
  3. Khadi and Village Industries Commission (KVIC)
    1. Established in 1956, headquarters New Delhi
    2. Provides employment opportunities in rural areas by promotion and development of khadi and village industries
    3. Functions under the Ministry of MSME
  4. Coir Board
    1. Established in 1953, headquarters Cochin
    2. First coir industry in India was established by James Darragh in Alleppey in 1859
    3. Is responsible for formulation and implementation of schemes for the promotion and development of coir industry in India
    4. Primary coir exports include coir mats, coir textiles and coir pith
    5. The Coir Board functions under the Ministry of MSME
  5. Small Industries Development Bank of India (SIDBI)
  • Established in 1990
  • Objectives include the promotion, financing and development of small scale industries
  • SIDBI was ranked among the top 30 development banks in the world by the The Banker, London
  • SIDBI functions under the Ministry of Finance
Keywords: India, ias, upsc, civil service, study material, general studies, free
EDUCATIONAL INSTITUTES FOR THE MSME SECTOR
The Government has established three national level Entrepreneurship Development Institutes. These institutes develop training modules, undertake research and provide consultancy services for the MSME sector. All these institutes function under the Ministry of MSME
Institute
Location
Established
National Institute for Micro, Small and Medium Enterprises (NIMSME)
Hyderabad
1960
National Institute of Entrepreneurship and Small Business Development (NIESBUD)
Noida
1983
Indian Institute of Entrepreneurship (IIE)
Guwahati
1993
Keywords: India, ias, upsc, civil service, study material, general studies, free
PROGRAMMES FOR THE MSME SECTOR
Some of the important programmes are highlighted in this section. For a complete list of schemes and programmes see here and here
  1. Cluster Development Initiative (CDI)
    1. Clusters are defined as sectoral and geographical concentrations of enterprises that share common opportunities and threats
    2. Clusters facilitate the development of inter-firm cooperation to promote local production and collective learning
    3. Clusters account for over 60% of manufactured exports from India
    4. India has over 400 clusters of Small and Medium Enterprises (SME) and 2000 artisan clusters
    5. The CDI in India is supported by the Cluster Development Programmer of the United Nations Industrial Development Organisation (UNIDO)
    6. The CDI is a programme implemented by the Ministry of MSME
  2. National Manufacturing Competitiveness Programme (NMCP)
    1. Launched in 2005
    2. Aims to increase competitiveness in the face of liberalization and moderation of tariff rates
    3. Implemented by the National Manufacturing Competitiveness Council functioning under the Ministry of MSME
  3. Scheme of Fund for Regeneration of Traditional Industries (SFURTI)
    1. Launched in 2005
    2. Aims to achieve comprehensive development of clusters of khadi, village and coir industries
    3. Implemented by the KVIC and the Coir Board
  4. Rajiv Gandhi Udyami Mitra Yojana (RGUMY)
    1. Launched in 2008
    2. Aims to provide support and assistance to first-time entrepreneurs
    3. Helps in dealing with various procedural and legal formalities required for the establishment of the enterprise
    4. Implemented by the Ministry of MSME
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