Competitive Business Strategy for Sustainable Development of
* Investment limit in Plant & Machinery
** Investment limit in equipments
*** Rs 50 = 1 USD
Performance of MSMEs
The performance of MSME sector is assessed by its contribution to exports, employment and economic growth, production and investment growth and contribution to GDP and National Income etc.
Product of MSMEs
There are over 6000 products ranging from handloom sarees, carpets and soaps papads to pickles, and machine parts for large industries.
Exhibit: 2 Products of MSMEs
Exhibit: 3 Production and Investment Growth of MSMEs
Exhibit: 4 Employment Growth of MSMEs
Comparison of the MSME Sector with the overall industrial sector
The MSE sector has maintained a higher rate of growth vis-a-vis the overall industrial sector.
Exhibit: 5 Contribution of MSME to GDP
*The data for the period 2005 – 06 is for small scale industries.
Problem of MSME Sector:
1. Due to the unorganized nature of the sector, entrepreneurs and workers face difficulties in accessing government schemes. Consequently, the workers engaged in the MSME sector and these are often the most vulnerable and poor have very little bargaining power and are exploited by the middlemen, unit owners, and big business houses.
2. Unable to take up aggressive marketing, like big industries, they cannot find markets despite good quality and competent prices.
3. The dispersed, unorganized nature of the industry also raises issues of quality, bulk production and inability of meeting big orders. Often individual units lack packing facilities. As a result, markets, especially for traditional MSEs are shrinking and workers are experiencing a dip in wages. Moreover, as most non-traditional MSEs serve as 'captive units"for big industries , often workers, especially women's do not get paid until the product is picked up. The situation is same for the traditional sectors where payments are made by traders and even government cooperation's only often the stock is sold. Thus money is held up, further impoverishing the workers.
4. The MSEs engaged in manufacturing of products such as paints, dyes and chemical explosives, minerals, leathers and leather goods, etc., pollute the environment. These nits have to obtain non pollution certification from the concerned pollution control agencies of the state.
5. Different segments of the MSM sector are dominated by different social groups. Women are mostly found in the unregistered sector- food processing enterprises, manufacturing enterprises and weaving-and often work part time in the family enterprises.
6. Non availability of quality raw materials such as dyes and yarn (especially for handlooms and power looms); vital inputs such as power (for power looms, handicrafts, other industrial MSMs); and proper packaging facilities continue to be a major bottleneck .
7. Tough competition and financial strain have made SME realize that they need a uniform Assessment system to pit their strength against the competitors.
Solution for the problem in MSME sector:
1. upgraded technology coupled with adequate and timely credit was necessary for the sector growth.
2. Innovation and marketing initiatives and skill development a required for the growth of MSME in a economy set to growth in double digit.
3. Financial institution should shift themselves to an approach of investing in entrepreneurship than on big enterprises.
4. Entrepreneurship education and training are the methods of brining them in to mainstream.
5. E-cluster model is necessary to beat challenges of globalization and faster penetration of innovation idea for inclusive market growth.
6. The government shall create policies to facilitate competitive outcome in the market.
In order to achieve 11.8% economic growth by 2013, MSME should come out with workable policies to help the government to announce suitable measures during the forthcoming budget session. A technology vibrant, internationally competitive small and medium industry should be encouraged to emerge, to take a sustainable contribution to national income, employment and exports. It is essential to take care of the sector to enable it to take care of the Indian economy government should spent more research to come up with a workable long-term plan to lead human resources of the community at every region. Those activities will assist to build capacity of the country and maintain their long time sustainability, at the minimum.
1. Annual report MSME 2011-2012
2. International trade statistics, WTO
3. Economic survey 2009-2010 unleashing India's Innovation: Toward sustainable and inclusive growth,
mark A. dutz,
4. World bank publication, 2007.
Source: E-mail August 13, 2013
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