INDIA AND MSME

India is richly endowed with abundance of diversified natural resources and is also the home of largest English speaking workforce and second largest population. But still India ranks poorly on almost all indices showing its dismal performance on socio economic sector. We at ALL ABOUT MSME believe that progress and prosperity of a nation like India depends largely on its small enterprises as is the case of China. Today the Micro, Small and Medium Enterprises (MSME) sector has been recognized as the engine of growth all over the world. Many countries of the world have established a SME Development Agency as the nodal agency to coordinate and oversee all government interventions with respect to the development of this sector.The Micro, Small and Medium Enterprises (MSMEs) are a vital part of the Indian economy. They contribute to over 45% of industrial production and around 40% of the total exports. There are about 13 million MSMEs in India, which employ about 31 million people. So, it is easily the single largest contributor in terms of employment generation in the manufacturing sector.

                                                  Realising the tremendous contribution of the MSMEs in industrial production, employment generation and exports, the Government of India has introduced several policies to increase business and promote growth among the MSMEs over the past few decades.

                                                  For the first time, in India, the Medium establishment has been defined in terms of a separate Act, governing the promotion and development of Micro, Small and Medium Enterprises. This is the Micro, Small and Medium Enterprises Development Act, 2006 (which has come into force from October 2, 2006). The Office of Development Commissioner (Micro, Small and Medium Enterprises) functions as the nodal development agency under the Ministry of Micro, Small and Medium Enterprises.

                                                  The post liberalisation era in the Indian economy has ushered newer opportunities and challenges for the MSMEs. As global competitiveness becomes intensive, with emergence of global supply chains, MSMEs are making a transition to a new business environment. MSMEs form an integral part of almost every value chain and there is a symbiotic relationship between the large corporations and relatively smaller-sized suppliers.

The domestic market is no more an insulated zone in a controlled economy; the competitive pressures of a free market economy are catching up in India. In the earlier protected economy scenario, even inefficient MSMEs in the manufacturing sector managed to be profitable. However, with the opening up of economy, the MSMEs have to catch up with global standards of excellence to remain competitive and profitable. MSMEs, therefore, have to adapt to new standards in technology, quality and pricing to be able to survive in the market place.

The future of the MSMEs will depend on overcoming the challenges of the liberalised world and by enhancing their competitiveness in an increasingly global economy.