It has been a month that the Street Vendors Bill has passed and now that the entrepreneurs on the very bottom of the pyramid have been taken care of, I thought it was the right time to climb the ladder a step further. Micro, Small and Medium enterprises constitute of the industries with an initial investment of 25lakh- 10crore for manufacturing sector and 10lakh- 5crore for the service sector. They employ 40% of the Indian workforce (69million people) through 36 million industrial units that make up for 90% of the total industrial units in India. It is a widely held view that MSMEs do not contribute significantly to the growth of the country, when actually they contribute 8% to the GDP (2012-13). Moreover, this sector has been growing at a rate (11%) faster than the national growth rate (7-8%).
Statistics say that in the prosperous countries Small and Medium enterprises constitute for 95% of the total industrial units and employ 65% of the total population whereas the no. of SMEs is much lower in low income (developing) countries due to regulatory or operational problems even though they are the highest employment generating sector in most of them.
SMEs face specific challenges such as difficulty to access finance, greater burden from regulatory frameworks, cost disadvantage to expand in relation with bigger companies, lack of sophisticated technology, low production capacity, lack of skilled managers, ineffective production, distribution strategy etc. Thus targeted policies are needed for SMEs .They are key engines of the real economy and the seedbed for bigger enterprises.
*according to Center for International Development at Harvard University