Context:
India Council for Research on International Economic Relations (ICRIER) has released its annual survey on MSMEs, focusing on the leverage of E-commerce for the growth of MSMEs.
ICRIER (established in 1981) is one of India’s premier economic think tanks with the goal of providing policy advice to effectively deal with external economic shocks.
MSMEs in India:
- Around 19.3 million MSMEs which employ around 131.04 million individuals are registered on the Udyam portal of which 96.2 % are classified as micro, 3.4 % as small, 0.4% as medium enterprises.
- Udyam portal provides MSMEs with a permanent registration and basic identification number.
- 27% of the MSMEs are engaged in manufacturing and 73% are in services.
About MSMEs:
- Regulated under the Micro, Small & Medium Enterprises Development (MSMED) Act, 2006.
- Nodal Ministry – Ministry of MSME.
- Earlier, MSMEs were categorised based on the amount invested in plant and machinery/equipment. With revised regulations effective from July 2020, annual turnover has also been added as a criterion.
| Comparison between MSME Act 2006 and 2020 Notification | |||||
| 2006 | 2020 | ||||
| Category | Enterprise | Range | Category | Enterprise | Range |
| Investment in Plant and Machinery or Equipment | Micro Enterprise | Does not exceed ₹25 lakhs | Manufacturing Enterprises and Enterprises rendering Services | Micro Enterprise | Investment in Plant and Machinery or Equipment: Not more than ₹1 crore |
| Small Enterprise | Between ₹25 lakhs and ₹5 crores | Annual Turnover: Not more than ₹5 crores | |||
| Medium Enterprise | Between ₹5 crores and ₹10 crores | Small Enterprise | Investment in Plant and Machinery or Equipment: Not more than ₹10 crores | ||
| Rendering of services | Micro Enterprise | Does not exceed ₹10 lakhs | Annual Turnover: Not more than ₹50 crore | ||
| Small Enterprise | Between ₹10 lakhs and ₹2 crores | Medium Enterprise | Investment in Plant and Machinery or Equipment: Not more than ₹50 crore | ||
| Medium Enterprise | Between ₹2 crores and ₹5 crores | Annual Turnover: Not more than ₹250 crore | |||
- Ministry of MSME heads 5 statutory bodies –
- Khadi and Village Industries Commission (KVIC)
- Coir Board
- National Small Industries Corporation Limited (NSIC)
- National Institute for Micro, Small and Medium Enterprises (NI-MSME)
- Mahatma Gandhi Institute for Rural Industrialisation (MGIRI)
Source: Financial Express
Previous Year Question
Consider the following statements with reference to India:
1. According to the ‘Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, the ‘medium enterprises’ are those with investments in plant and machinery between Rs. 15 crores and Rs. 25 crores.
2. All bank loans to the Micro, Small and Medium Enterprises qualify under the priority sector.
Which of the statements given above is/are correct?
[UPSC Civil Services Exam – 2023 Prelims]
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer: (b)
Explanation:
Medium Enterprise: An enterprise where the investment in plant and machinery or equipment does not exceed Rs. 50 crores, and turnover does not exceed Rs. 250 crores. Hence, Statement 1 is not correct.
The areas identified under Priority Sector Lending (PSL) in India by the Reserve Bank of India include agriculture, micro, small and medium enterprises (MSMEs), export credit, education, housing, social infrastructure, renewable energy, and weaker sections of society. Hence, Statement 2 is correct.
