 Definition  Features  Importance

T Government of India enacted the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 in terms of which the definition of micro, small and medium enterprises is as under: a) Enterprises engaged in the manufacture or production, processing or preservation of goods as specified below: (i) A micro enterprise is an enterprise where investment in plant and machinery does not exceed Rs. 25 lakh; (ii) A small enterprise where investment is more than Rs. 25 lakh but does not exceed Rs. 5 crore; and (iii) A medium enterprise where investment is more than Rs.5 crore but does not exceed Rs.10 crore.

(b) 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.  A micro enterprise is an enterprise where the investment in equipment does not exceed Rs. 10 lakh;  A small enterprise where the investment in equipment is more than Rs.10 lakh but does not exceed Rs. 2 crore; and  A medium enterprise where the investment in equipment is more than Rs. 2 crore but does not exceed Rs. 5 crore.

 promoting equitable development.  employment potential at low capital cost.  registered higher growth rate compared to the overall industrial sector  agility and dynamism  innovativeness and adaptability

 As per available statistics (4 th Census of MSME Sector:2009), this sector employs an estimated 59.7 million persons spread over 26.1 million enterprises.  It is estimated that in terms of value, MSME sector accounts for about 45% of the manufacturing output  and around 40% of the total export of the country.

 Pre 1951: Low entrepreneurial initiative  : Protection and growth  Post 1991: Competition amidst LPG and assistance

· High contribution to domestic production · Significant export earnings · Low investment requirements · Operational flexibility · Location wise mobility · Less imports · Capacities to develop appropriate indigenous technology · Import substitution · Contribution towards defense production · Technology – oriented industries · Competitiveness in domestic and export markets

· Low Capital base · Concentration of functions in one / two persons · Inadequate exposure to international environment · Inability to face impact of WTO regime · Inadequate contribution towards R & D · Lack of professionalism

· Food Processing · Agricultural Inputs · Chemicals & Pharmaceuticals · Engineering; Electricals; Electronics · Electro-medical equipment · Textiles and Garments · Leather and leather goods · Meat products · Bio-engineering · Sports goods · Plastics products · Computer Software, etc.

. The domestic commercial banks are expected to enlarge credit to priority sector  and ensure that priority sector advances (which include the micro and small enterprises sector) constitute 40 per cent of Adjusted Net Bank Credit (ANBC  In terms of the recommendations of the Task Force banks have been advised to achieve a 20 per cent year-on-year growth in credit to micro and small enterprises and a 10 per cent annual growth in the number of micro enterprise accounts  Public sector banks have been advised to open at least one specialized branch in each district.  As on March 2011 there are 1220 specialized MSME branches

 Primary responsibility for promotion and development of SME: State Govt.  Role of Ministry of MSME to support the SG in their efforts to dev their MSMEs.

 National Small Industry Corp ltd: NSIC  Khadi and Village Industry commission :KVIC  Coir Board  And 3 National Level entrepreneurship development Institutes  National institute for entrepreneurship and small business development (NIESBUD): NOIDA, UP  NI-MSME: National Institute for MSME: Hyderabad  Indian Institute of Entrepreneurship: Guwahati

 Identification and exploitation of previously unexplored opportunities  Specifically.. It is concerned with  ‘the sources of opportunities: the process of discovery, evaluation, and exploitation of opportunities  And the set of individuals who discover evaluate and exploit them.’  These individuals are the entrepreneurs..

 Is a combination of  innovative, proactive and risk-seeking behavior  that crosses national borders  and is intended to create wealth in organizations..  Further we refer to entrepreneurial firm when referring to SMEs (fewer than 500 employees)

 Institutions and Entrepreneurship  Formal : how firm starts.. Registration, licensing, incorporation, tax etc.. ▪ More friendly the better is SME growth  Informal Institutions: cultural values and norms.. ▪ Individualistic and low uncertainty-avoidance societies foster SME growth and vice v ersa..

 Resources and Entrepreneurship  Value: Entrepreneurs resources must create value: networks, contacts etc..  Rarity: special knowledge and insight of business opportunities  Inimitability: non imitable or continuously innovative  Organization: resources/talent must be embedded..

 Growth: different growth strategy  Innovation: explore and flourish.. Ensure sustenance..  Financing: formal (Sweden,US) and informal finance(China). Recently MFI..  Internationalization..  Firms are born global… international joint ventures  Or firms internationalize

Entering foreign marketsStaying in domestic markets Direct ExportsIndirect Exports (through export intermediaries) Franchising/licensingSupplier of foreign firms FDI (through strategic alliances, wholly owned subsidiary, foreign acquisition) Franchisee/licensee of foreign brands Alliance partner of foreign direct investors Harvest and exit (through sell-off to and acquisition by foreign entrants)

 Def: MSME  Obj  Advantages  Disadvantages  SMEs and globalization.. Why, how, and will it be sustainable