Enterprises: They Come in All Sizes

Micro. Small. Medium. And the large impact they made on our economy.

Second only to agriculture, the MSME sector contributes about 7% to the GDP of our country. Over 36 million units provide employment to more than 80 million people and has a diversified product portfolio of more than 6000, ranging from electronics to apparels, food processing to furniture, from textiles to transport and tourism, they contribute to 45% of the manufacturing output of the country as well as contribute 40% of its exports. Spread across the rural heartlands of India, MSMEs are now seen as the tool to promote growth, provide employment and to propel a laggard economy in a equitable way where the benefits are shared by all.

What is a MSME?

Micro, small and medium enterprises are defined based on their investment in plant and machinery (in the case of manufacturing enterprises) and on the investment in equipment for providing services.

Classification Manufacturing Enterprise Service Enterprise
Micro Investment up to Rs 2.5 million Investment up to Rs 1 million
Small Investment up to Rs 50 million Investment up to Rs 20 million
Medium Investment up to Rs 100 million Investment up to Rs 50 million


Why are MSMEs important?

To revive a struggling economy, it is important for the country to promote the emergence and growth of MSMEs. Instead of try create job-seekers, MSMEs will be become job-creators, especially among the rural and backward areas. This will also reduce the flow people migrating to the cities for employment and will develop the towns and villages as economic activity rises.

India is also facing a plethora of challenge as it traverses a development agenda. From infrastructure to sustainable development, only the nimble MSMEs can bring about the required innovation and dynamism to guide the Indian economy on its journey to becoming an economic heavy weight.

India has a vast pool of talented youth who are at the moment being dogged by a lack of opportunities – highly skilled engineers, MSMEs can support the automobile and telecom industry by manufacturing components that are currently cheaply imported from Chinese makers. They can also enter into strategic partnerships with global players to export them into the international market.

What are the benefits?

Having recognised the potential of MSMEs, the government has been lavishing sops to make it easier for them to do business. The 2017 Budget, provided for a reduction in the rate of tax, from 30% to 25% for companies with an annual turnover of Rs 50 crores. It is estimated about 96% of the companies operating in the MSME sector would get this benefit. There are also numerous schemes aimed at start-ups to promote innovation at the rural level. The Scheme for Promoting Innovation and Rural Entrepreneurship (ASPIRE) was launched in 2015 to promote start-ups in the agro-industry is just one of the many programmes available.