Changing the mindset of the youth of India to become an entrepreneur and generate jobs for others.Some other factors leading to the growth of MSME in India are as follows: To support MSME during the COVID-19 pandemic, the Parliamentary Standing Committee on Industry has recommended providing soft loans to micro, small and medium enterprises at lower interest rates of 3-4%. The COVID-19 pandemic further increased the problems like delays in payments, scarcity of raw material availability, high informality, etc.A study conducted by Khadi and Village Industries Commission (KVIC) revealed that due to the COVID-19 pandemic, more than 50% of MSMEs were shut down, and there was also a drop in production and revenue.Lack of modern technology and modernization.Poor infrastructure for capacity building and poor marketing strategy.Lack of skilled manpower and labour law compliances restrict the growth of the sector resulting in a slower production process and compromise with product quality.Most of the micro, small and medium enterprise owners are not well educated and are from poverty-hit regions.Delay in getting access to water and power connection in the remote area.They largely rely on informal sources and face a financial gap of 158 billion dollars. Although in just a decade, the number of women-led MSMEs in India has jumped from 2.15 lakh to 1.23 crore.In 2018 approx, 40% of micro, small and medium enterprises lending was done through the informal sector means finding access to formal credit is still a challenge for MSMEs. Due to the lack of assets among micro, small and medium enterprises such as land and building etc., there is a huge credit gap.Delay in payment even though the MSME Samadhan portal which was set up to help enable faster payments to India’s micro, small and medium enterprises. Some of the limitations of MSME, which every UPSC aspirant must be familiar with, are listed below: Khadi and Village Industries, with low capital investment, employ a large number of women in rural India and helps in the upliftment of rural and other backward areas.Īlong with the various advantages of MSME, there are some challenges as well on which the government should work upon.Micro, Small, and Medium Enterprises also help uplift backward people and tackle poverty by generating employment in rural areas through industrial development.MSMEs are also helping India by making it a manufacturing hub.The Ministry of Micro, Small, and Medium Enterprises has the aim to increase MSME’s contribution to Indian GDP from 29% to 50% by 2025 to become a 5 trillion dollar economy.Micro, Small, and Medium Enterprises contribute to 29% of the Indian GDP, 45% of manufacturing output, and about 40% of overall export, and it employs over 11 crore people, out of which 55% of employment happens in urban enterprises which make MSMEs the second largest employer after agriculture.The significance of MSME for the growth and development of the country is as follows: Micro, Small, and Medium Enterprises (MSME) play a vital role in the nation’s economic development. Medium – As per the MSME classification criteria, the investment in plant and machinery equipment of Medium enterprises is not more than 20 crore, and the annual turnover is not more than 100 crore.Small – the investment in plant and machinery equipment will not be more than 10 crores, and annual turnovers will not be more than 50 crores.Micro – the investment in plant and machinery equipment will not be more than 1 crore, and annual turnovers will not be more than 5 crores.The MSME classification into Micro, Small, and Medium Enterprises based on investment in plant and machinery equipment are as follows: The new definition of MSME was announced in the Atmnirbhar Bharat package and expanded the investment and turnover limit. MSME new definition eliminates the distinction between manufacturing and services enterprises and also increases the investment and annual turnover criteria for such enterprises. The government revised the MSME definition in 2020 to boost its growth. Micro, Small and Medium Enterprises are engaged in the production, manufacturing, processing, or preservation of goods and commodities subject to limits of investment. Micro Small and Medium Enterprises (MSMEs) were introduced by the government through the MSME Act, 2006.
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