Page 1 of 20
Journal for Studies in Management and Planning
Available at http://edupediapublications.org/journals/index.php/JSMaP/
e-ISSN: 2395-0463
Volume 02 Issue 1
January 2016
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 337
A Study of Micro Small Medium Enterprises in India
(Msme)
Subzar Ahmad Padder
School of economics, Devi Ahilya Vishwavidyalaya, Indore (DAVV)(M.P)
Introduction:
After independence, Government of
India (GOI) initiated the path of
industrialization by developing
manufacturing base to achieve economic
prosperity. Much of the industrialization
was brought about through the
implementation of five-year plans.
Industries such as iron and ore, oil
refineries, cement, and fertilizers were
brought under the gamut of public sector
enterprises. The policy makers then,
encouraged the development of small and
medium scale industries. They perceived
that Indian small and medium scale
industries would play a vital role in the
economic progress India accorded high
priority to SMEs thereafter and pursued
support policies to make these enterprises
viable and vibrant over time. Now these
have become major contributors to the
GDP. The Census carried out by the
Ministry of MSME (2006-07) asserts that
as many as 480,946 units would be
closedown and while, 77,723 units would
be declared sick by March 2010. Jain et al.
(2011) observed that the main constraints
faced by this MSME sector are:
market channel, finance distribution, and
power regulation. But other issues like
infrastructure and technology were not
highlighted. But now a day’s technological
innovation and adaptation is unavoidable
for firms to get entry in to new markets
(Becheikh et al.2006).
Definition of Micro, Small and Medium
Enterprises in India
There exists several definitions of
the term small and medium enterprises
(SMEs), varying from country to country
and varying between the sources reporting
SME statistics. The commonly used
criteria at the international level to define
SMEs are the number of employees, total
net assets, sales and investment level. If
employment is the criterion to define, then
there exists variation in defining the upper
and lower size limit of a SME. The
European Union makes a general
distinction between self-employment,
Page 2 of 20
Journal for Studies in Management and Planning
Available at http://edupediapublications.org/journals/index.php/JSMaP/
e-ISSN: 2395-0463
Volume 02 Issue 1
January 2016
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 338
micro, small and medium sized businesses based on the following criteria
Number of people employed
Types of Enterprises MSME Act (2006) MSME (Amendment Bill)
2015
0 Self
Employed
Classific
ation
Manufacturing
Enterprises
Service
Enterprises
Manufacturing
Enterprises
Service
Enterprises
2-9 Micro
business
Micro Rs 25 lakh Rs 10 lakh Rs 50 lakh Rs 20 lakh
10-49 Small
business
Small RS 25 lakh to
Rs 5 crore
Rs 10 lakh
Rs 2 crore
Rs 50 lakh to
Rs 10 crore
Rs 20 lakh
to 5 crore
50-
249
Medium
size
business
Medium Rs 5 crore to
Rs 10 crore
Rs 2 crore
Rs 5 crore
Rs 10 crore to
Rs 30crore
Rs 5 crore
to 15 crore
In the Indian context, micro, small and
medium enterprises as per the MSME
Development Act, 2006 are defined based
on their investment in plant and machinery
(for manufacturing enterprise) and on
equipments for enterprises providing or
rendering services. According to the
Micro, Small and Medium Enterprises
(MSME) Development Act of 2006,
(India) a micro enterprise is where the
investment in plant and machinery does
not exceed twenty five lakh rupees. A
medium enterprise is where the investment
in plant and machinery is more than five
crore rupees but does not exceed ten crore
rupees. A small enterprise is where the
investment in plant and machinery is more
than twenty five lakh rupees but does not
exceed five crore rupees. In the case of the
enterprises engaged in providing or
rendering of services, as
The new classification MSME is
done by (Amendment) Bill 2015. In this
amendment the investment limits of
production and services are increased. The
investment limits for production is
increases Rs 25 lakh to Rs 50 lakh for
micro enterprises, Rs 50 lakh to 10 crore
Page 3 of 20
Journal for Studies in Management and Planning
Available at http://edupediapublications.org/journals/index.php/JSMaP/
e-ISSN: 2395-0463
Volume 02 Issue 1
January 2016
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 339
for medium and 10 crore to 30 crore to
Medium enterprises. The limits are also
increased for enterprises providing
services are as the limit is increased for
micro Rs 10 to 20 lakh, Rs 20 lakh to 5
crore for small and 5 crore to 15 crore for
Medium enterprises.
REVIEW OF LITRATURE
The comprehensive literature demonstrates
that MSMEs are necessary for sustained
economic growth and development of any
economy including India. To justify the
need of present study, following literature
has been reviewed.
Mali, DD. (1998): Had analysed
that the SEDME (small enterprises
development, management and Extension)
have observed that small and medium
enterprise (SMEs) and micro enterprises
have to face increasing competition in the
present scenario of globalization, they
have to specifically improve themselves in
the fields of management, marketing,
product diversification, infrastructural
development , technology up gradation
Moreover, new small and medium
enterprises may have to move from slow
growth area to the high growth area and
they have to form strategic alliance with
entrepreneurs of neighbouring countries.
Data bank on industries to guide the
prospective entrepreneurs including
investors from abroad is also needed.
Kalantaridis and Pheby (1999):
have analyzed innovativeness in SMEs
sector in two ways. Firstly, success cases
of local innovation systems at the expense
of less successful areas, which are thus in
greater need of policy intervention. This
paper aspires to address this gap in the
literature by focusing on the experience of
an area (Bedfordshire) characterized by
low levels of innovative activity. Second,
the search for the factors that
accommodate or hinder innovation
concentrated heavily at the macro-level.
Consequently, any policy
recommendations failed to distinguish
between SMEs according to the extent and
nature of their previous involvement in
innovation.
Steensma, Marino and Weaver
(2000): have emphasized on adopting of
cooperative strategies by the small firm to
make a significant contribution in
achieving economic strengths According
to them, cooperative strategies consists of
structured cooperative agreements between
firms slike marketing coalition, research &
development agreements and distribution
agreements to minimize the cost. Such
cooperation may allow these
entrepreneurial firms to increase
