Micro Small and Medium Enterprise

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2011
By : -
Rini Bhattacharya
Rashi Dawar
Nehal Mittal
Abhishek Swami
Gaurav Yadav
Sagnik Ghoshal

Micro Small & Medium Enterprise

Index: -

Definition: -
(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 [original cost excluding land and building and the items specified by the Ministry of Small Scale Industries vide ii) A small enterprise is an enterprise where the investment in plant and machinery (original cost excluding land and building and the items specified by the Ministry of Small Scale Industries not exceed Rs. 5 crore) iii) A medium enterprise is an enterprise where the investment in plant and machinery (Original cost excluding land and building and the items specified by the Ministry of Small Scale 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. These will include small road & water transport operators (owning a fleet of vehicles not exceeding ten vehicles), retail trade (with credit limits not exceeding Rs.10 lakh), small business (whose original cost price of the equipment used for the purpose of business does not exceed Rs.20 lakh) and professional & self employed persons (whose borrowing limits do not exceed Rs.10 lakh of which not more than Rs.2 lakh should be for working capital requirements except in case of professionally qualified medical practitioners setting up of practice in semi-urban and rural areas, the borrowing limits should not exceed Rs.15 lakh with a sub-ceiling of Rs.3 lakh for working capital requirements).

Precisely we might conclude that: -

(i) A micro enterprise is an enterprise where the investment in equipment does not exceed Rs. 10 Lakh.
(ii) A small enterprise is an enterprise where the investment in equipment is more than Rs.10 lakh but does not exceed Rs. 2 crore. (iii) A medium enterprise is an enterprise where the investment in equipment is more than Rs. 2 crores.

IMPORTANCE: -
* MSMEs play a major role in the country's economic development through their contribution in the following: rural industrialization; rural development and decentralization of industries; creation of employment opportunities and more equitable income distribution; use of indigenous resources; earning of foreign exchange (forex) resources; creation of backward and forward linkages with existing industries; and entrepreneurial development. * They are vital in dispersing new industries to the countryside and stimulating gainful employment. A country like the Philippines where labor is abundant has much to gain from entrepreneurial activities. MSMEs are more likely to be labor-intensive. Thus, they generate jobs in the locality where they are situated. In this sense, they bring about a more balanced economic growth and equity in income distribution. * MSMEs are quick in assimilating new design trends, developing contemporary products, and bringing them to the marketplace ahead of the competition. MSMEs tend to be far more innovative in developing indigenous or appropriate technology, which may be grown later into pioneering technological breakthroughs. * They are able to effectively increase the local content or the value added in final goods that are processed and marketed by large manufacturing firms. * MSMEs are notably skillful in maximizing the use of scarce capital resources and are able to partner with large firms by supplying locally available raw materials in unprocessed or semi-processed forms. * Also, MSMEs can act as the seedbed for the development of entrepreneurial skills and innovation. They play an important part in the provision...
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