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Micro, Small and Medium Enterprises:
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The Ministry of Micro, Small and Medium Enterprises is the nodal Ministry for formulation of policies, programmes and schemes, their implementation and related co-ordination, for the promotion and development of small scale industries in India. The role of the Ministry is to assist the States in their efforts for the growth of the small scale sector, by enhancing their competitiveness in an increasingly liberalised economy. It is assisted by an attached office and two public sector enterprise, namely:-

  • Micro, Small and Medium Enterprises Development Organisation (MSME-DO) :- the Office of the Development Commissioner (Micro, Small and Medium Enterprises) [earlier known as the O/o the DC (SSI)] is also known as Micro, Small and Medium Enterprises-Development Organisation (MSME-DO). It is the apex body for assisting the Government in formulating, coordinating, implementing and monitoring policies and programmes for micro, small and medium enterprises (MSMEs) in the country. MSME-DO provides a comprehensive range of common facilities, technology support services, marketing assistance, entrepreneurial development support, etc.

  • National Small Industries Corporation Ltd (NSIC) :- was established by the Government with a view to promoting, aiding and fostering the growth of micro, small and medium enterprises in the country, with a focus on commercial aspect of their operations. It implements several schemes to help the MSMEs in the areas of raw material procurement, product marketing, credit rating, acquisition of technologies, adoption of improved management practices, etc.

  • Khadi and Village Industries Commission (KVIC) :- established under the Khadi and Village Industries Commission Act, 1956, as a statutory organisation engaged in promotion and development of khadi and village industries for providing employment opportunities in the rural areas.

  • Coir Board :- is a statutory body, established under the Coir Industry Act, 1953, for the promotion and development of coir industry in India as well as for uplifting the living conditions of the workers engaged in this industry.

Also, a National Commission on Enterprises in the Unorganised Sector (NCEUS) has been set up for addressing the wide range of issues affecting the productive potential of the unorganised micro and small productive units.

Besides, there are three national level 'Entrepreneurship Development Institutes (EDIs)' for the development of training modules, undertaking research and providing consultancy services for entrepreneurship development in the small scale sector. These include:-

The “Micro, Small and Medium Enterprises Development (MSMED) Act, 2006” is the first single comprehensive legislation in India, covering micro, small and medium enterprises. Under the Act, the terms "medium sector" and "micro enterprises" have been defined for the first time.Also, the concept of ‘Industries’ has been widened to that of ‘Enterprises’. Enterprises have been classified broadly into two categories, namely, enterprises engaged in the manufacture/production of goods pertaining to any industry; and enterprises engaged in providing/rendering of services. The term "enterprise" has been defined in terms of investment in plant and machinery/ equipment (excluding land & building). Accordingly, the definition of micro, small and medium enterprise is:-

  Investment in plant and machinery/ equipment (excluding land and building)
  Manufacturing Enterprises Service Enterprises
Micro Up to Rs. 25 lakh Up to Rs. 10 lakh
Small More than Rs. 25 lakh and up to Rs. 5 crore More than Rs. 10 lakh and up to Rs 2 crore
Medium More than Rs. 5 crore and up to Rs. 10 crore More than Rs. 2 crore and up to Rs. 5 crore

In order to protect, support and promote small enterprises as also to help them become self-supporting, a number of protective and promotional policy measures have been undertaken by the Government. The promotional measures cover:- (i) industrial extension services; (ii) institutional support in respect of credit facilities; (iii) provision of training facilities; (iv) supply of machinery on hire-purchase terms; (v) assistance for domestic marketing as well as exports; (vi) technical consultancy and financial assistance for technological upgradation; etc.

The Reservation Policy is the most important policy of the Government for the sector. It has the twin objectives of ensuring increased production of consumer goods in the small scale sector; and expanding employment opportunities through setting up of small scale industries. Reservation of items for exclusive manufacture in SSI sector is statutorily provided for in the Industries (Development and Regulation) Act, 1951. The overwhelming consideration for reservation of an item is its suitability and feasibility for being made in the small scale sector without compromising the quality aspect. But, with a view to providing to the sector, opportunities for technological upgradation, promotion of exports and economies of scale, items so reserved have been dereserved from time to time. The issue of reservation/de-reservation of product is examined on a continual basis by an Advisory Committee on Reservation constituted under the Act. During the year 2006-07, 180 items reserved for manufacture in small scale industries have been dereserved. As on 13th March, 2007, 125 items were dereserved and as on 8th February, 2008, 79 more were dereserved. At present, the total number of items reserved for exclusive manufacture in the micro and small scale sector are 35.

Recognising the role of credit for the small scale sector, a focused credit policy has been in place since the early days. Priority sector lending is its most important component. Under it, banks are compulsorily required to ensure that defined percentage of their overall lending is made to the priority sectors, which includes small industries. As a part of the institutional arrangement, Small Industries Development Bank of India ( SIDBI ) has been set up as the apex refinance bank. Term loans are provided by State Financial Corporations (SFCs) and Scheduled Banks.

The other important policies for the sector relate to:- (i) excise duty; (ii) foreign direct investment approval;and labour laws.

Besides, several schemes and programmes have been undertaken by the Government with the aim of facilitating access to:- (i) adequate credit from financial institutions; (ii) funds for technology upgradation and modernisation; (iii) integrated infrastructural facilities; (iv) modern testing facilities and quality certification laboratories; (v) modern management practices, entrepreneurship development and skill upgradation through appropriate training facilities; etc. The schemes so announced include:- Small Industry Development Organisation also operates a number of schemes for the sector:- National Small Industries Corporation Ltd (NSIC) schemes for small scale industries relate to:-
  • Bill Financing
  • Working Capital Finance
  • Export Development Finance
  • Equipment Leasing Scheme
  • Raw Materials Procurement Support
  • Marketing Assistance Programme and Exports Assistance;
  • Stores Purchase Programme
  • Single Point Registration Scheme and other services.

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National Commission for Enterprises in the Unorganised Sector (NCEUS)
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Khadi and Village Industries Commission (KVIC)
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