The presentation covers the ecosystem of MSMEs in India, the challenges faced by entrepreneurs, GoI Initiatives, MSME Schemes provided by the government to encourage new enterprises, Opportunities available and the reasons of failure of new ventures and finally, details of the secors which provide opportunities for entrepreneurs to start a new business.
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Overview of Indian MSMEs
1. Overview of Indian MSMEs
(A Guide to launch a Successful Enterprise)
Dr. Gopaldas Pawan Kumar
BE(Mech.), MSc(EBM), MBA , PhD.
Associate Professor
gdpawan@gmail.com
2. The Presentation Covers
1. Profile of MSMEs.
2. Ecosystem of MSMEs.
3. Challenges faced by
Entrepreneurs.
4. Government of India Schemes.
5. Opportunities available to
Entrepreneurs.
6. Current MSMEs Products.
7. Sectors Vs Possible
Opportunities.
8. Reasons for Failure of
MSMEs.
9. Conclusions.
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3. Entrepreneur(ship)
• Doing something new or something different is a necessary condition for
a person to be called as an entrepreneur.
• One of the comprehensive definition of entrepreneurship: it is the
process of creating something new with value by devoting the necessary
time and effort, assuming the accompanying financial, psychic and
social risks and receiving the resulting rewards of monetary and personal
satisfaction and independence.” (Robert D. Hisrich and Michael P.
Peters ,1998)
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4. Profile of an MSME
• A Micro, Small and Medium Enterprise(MSME) is an ‘independently
owned and operated enterprise, designed for profit and sells known
products to known customers in local markets’.
• Under the previous classification a separate methodology was adopted
by the ministry for manufacturing and service sector.
• Presently turnover-based criterion is made applicable to
manufacturing as well as service sector .
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5. Definitions of MSMEs
(with effect from 01.07.2020)
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(Source: Ministry of MSME Notification,1st June’20)
Enterprise
Investment in Plant
and Machinery or
Equipment
Turnover
Micro enterprise ≤ Rs. 1 Crore ≤ Rs. 5 Crores
Small enterprise ≤ Rs. 10 Crores ≤ Rs. 50 Crores
Medium enterprise ≤ Rs. 50 Crores ≤ Rs. 250 Crores
6. The MSME Ecosystem
(Manufacturing and Services)
• Out of 6.33 crore MSMEs, 0.05 lakh are medium enterprises while 3.31
lakh are small and balance 6.30 crore are micro units.(Rs 5 Cr T.O.)
• The number of registered MSMEs are around 25 lakh units.
• MSME sector has created around 11 crore jobs, out of which 3.6 Cr are
in manufacturing, 3.9 Cr in trade and 3.6 Cr in other services.
(National Sample Survey , 2015-16)
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Dr. G.D Pawan Kumar
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(Source: Ministry of MSME Report,2019-20)
7. The MSME Ecosystem..
(Manufacturing and Services)
• MSMEs contribute around 6% of the manufacturing GDP and 25% of
the GDP from service sector.
• Further, around 33% of India's manufacturing output is from MSMEs.
• Share of overall exports is around 45% and have been maintaining
over 10% growth rate, consistently for the past many years.
(CII ,Report,2020)
• Lastly, around 20% of the MSMEs are based out of rural areas.
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Dr. G.D Pawan Kumar
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(Source: Ministry of MSME Report,2019-20)
8. Challenges Faced by Entrepreneurs
1. Financial Resources and Discipline-Availability of finance is critical for all
enterprises. Most of the ventures are underfunded. To improve liquidity, efficient
management of the accounts receivable is a big challenge.
2. Low Revenue Generation during initial growth force entrepreneurs to concentrate
on the funding instead of concentrating on the growth of business.
3. Team Work-Members should gel closely.Hiring and retaining high quality talent in
critical areas is a key challenge.
4. Inadequate Information on latest technologies , competitors activities, poor
environmental scanning increases risk of failure of new ventures.
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9. Challenges Faced by Entrepreneurs
(Continued)
• Tenacity of entrepreneurs is a very critical requirement. They have to be patient, persistent,
proactive and should never give up till he/she achieves desired results.
• Elaborate Regulations-Our country stands at 63rd place among 190 nations in the World
Bank’s ease of doing business. Government should reduce the number of approvals required.
• Lack of Mentorship and proper guidance are also the recurrent challenges.
• Tailored Offerings- Indian population with fragmented segmentation require tailor made
offerings that requires manufacturing flexibility.
• Value for Money Products-New units have to provide a better product than the existing ones.
Customers should feel that they have opted for a better choice.
• Differentiated Offerings- ‘Me-too’ products will never take off. Offering customers more than
what they require at present or in the near future is the real challenge of the entrepreneurs.
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10. Government of India Initiatives
• ‘Make in India’ campaign (2014) introduced to attract foreign investments and to
increase the share of the manufacturing sector to 25 per cent of GDP and to create a
100 million additional jobs in the manufacturing sector by 2022.
• To instill confidence in the start-ups, GoI increased foreign direct investment (FDI)
limits for most of the sectors and strengthened intellectual property rights (IPRs)
protection.
• ‘Standup India’ (2015) is aimed at providing bank loans (10 lakh and 1 Crore) to at
least one SC or ST borrower and at least one woman borrower per bank branch for
setting up a greenfield enterprise.
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11. Government of India Initiatives
• ‘Start-up India’ (2016) is intended to build a strong eco-system for nurturing
innovation for sustainable economic growth and generate employment
opportunities.
The Action Plan is divided across four areas:
• Simplification and Handholding of entrepreneurs
• Funding Support
• Industry-Academia Partnership and
• Incubation facilities
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12. GoI Initiatives
(Continued)
• ‘Digital India’ (2015) is to transform India into a digitally empowered society and
knowledge economy by ensuring availability of Government's services to citizens,
electronically.
• ‘Skill India’ (2015) aims to train over 40 crore people in different market-relevant
skills by 2022 to increase productivity through rural manpower.
• ‘Atmanirbhar Bharat Abhiyan’ (2020) which translates to 'self-reliant India' is to
make our country "a bigger part of the global economy" and to become self-
sustaining and self-generating country.
***
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13. MSME Schemes to Drive Entrepreneurship
1.Prime Minister Employment Generation Programme and Other Credit Support Schemes cover:
1.1.Prime Minister Employment Generation Programme(PMEGP)-implemented by Khadi and
Village Industries Commission (KVIC). The maximum cost of the project admissible in
manufacturing sector is ₹ 25 lakhs and in the service sector is ₹ 10 lakhs.
1.2.Credit Guarantee Trust Fund for Micro & Small Enterprises (CGTMSE)-Collateral free loan
up to a limit of ₹ 100 lakh is available.
1.3.Interest Subsidy Eligibility Certificate (ISEC)-credit at a concessional rate of interest of 4%
per annum for working capital is provided.
(Source: Ministry of MSME Report,2019-20)
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14. MSME Schemes to Drive Entrepreneurship
2.Development of Khadi, Village and Coir Industries- around eleven programmes are
administered for rural based units with financial assistance.
3.Technology Upgradation and Quality Certification- Financial support to improve quality,
promote innovation and entrepreneurship, tech upgradation, marketing support , funding
support for incubators , creating IPR awareness etc.
4.Marketing Promotion Schemes supports organising exhibitions abroad, participation in
International fairs by MSMEs , arranging Buyer-Seller meets , creating awareness of new
markets etc.
5.Entrepreneurship and skill Development Programme- EDPs are conducted to encourage
setting up of MSMEs ,Skill development, providing financial assistance to training institutes etc.
(Source: Ministry of MSME Report,2019-20)
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Dr. G.D Pawan Kumar (Source: Ministry of MSME Report,2019-20)
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15. MSME Schemes
(Continued)
6.Infrastructure Development Programme adopts cluster development approach for enhancing
productivity and competitiveness, financial assistance for establishment of centers for testing,
R&D, to create/upgrade infrastructural facilities such as water, telecommunication, drainage
and pollution control facilities, roads etc.
7.Scheme of Surveys, Studies and Policy Research helps collect MSME data , analyse to design
appropriate strategies.
8.National SC-ST-HUB-is set up to provide professional support to SC and ST Entrepreneurs to
fulfill the target, which the Government has kept for procurement from such units.
9.Scheme of Information, Education and Communication is to give wide publicity to various
schemes like providing financial assistance, technological assistance, market assistance etc.
)
7-Nov-20
Dr. G.D Pawan Kumar (Source: Ministry of MSME Report,2019-20
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16. Supporting Agencies
• Micro Units Development and Refinance Agency Ltd (MUDRA) provides refinance support
to Banks / MFIs / NBFCs for lending to micro units having loan requirement up to Rs 10
lakhs.
• NI-MSME(National Institute of MSME) provides National Executive Development
Programmes including Entrepreneurship and Skill Development Programmes , Micro
Enterprise Development , Agro Entrepreneurship etc.
• National Small Industries Corporation (NSIC) aims to promote, aid and foster the growth of
MSMEs in the country. Its schemes enhance their competitiveness and provide Marketing,
Technology, Finance and other Support Services.
(Source: Ministry of MSME Report,2019-20
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17. Credit Support Snapshot
(2019-2020)
Under Prime Minister’s Employment
Generation Programme (PMEGP)
Margin Money Assistance of Rs.1002.58
crore was provided to 32,227 Micro Units
Under Credit Linked Capital Subsidy Scheme
(CLCSS) Subsidy worth Rs 454.16 crore was disbursed
Under Credit Guarantee Trust Fund for Micro
and Small Enterprises (CGTMSE)
Credit Guarantee cover of Rs 27192 crore was
approved for 4,07,209 MSEs
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(Source: Ministry of MSME Report,2019-20)
18. Opportunities for Entrepreneurs
• The bottom-of-the pyramid space in India is a huge potential market for
offerings ranging from food, clothing, water , low cost housing and
hygiene items etc.
• Interest among experienced executives to start their own ventures is also
boosting entrepreneurial culture.
• Increase in spending on infrastructure and defense sectors is going to
provide sub-contracting opportunities to entrepreneurs.
• Hike in FDI in existing and emerging businesses is also another major
reason for the euphoria.
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19. Opportunities for Entrepreneurs
(Continued)
• With high demographic dividend (36 Cr youngsters are in 10-24 age group) and 1.5
Cr joining workforce annually, domestic demand will get a big boost for
establishment of new ventures.
• There is huge onboarding of MSMEs on e-commerce platforms due to high
penetration of internet. Around 6.5L SMEs are selling on e-commerce ,presently.
• Tailor made solutions would be required to meet diverse requirements of
multicultural and multilingual regions of the country.
• Finally, every problem provides number of opportunities for entrepreneurs to build
businesses around it. So, why wait, my dear friends?
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20. Reasons for Failure of New Ventures
• 42% failed as the product had no market.
• 29% firms ran out of cash.
• 23% did not have the right team.
• 18% closed due to pricing issues.
• 17% firms had poor product.
• 14% failed due to poor marketing and
• 8% had no investor interest (Griffith,2014).
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Analysis of 101 firms, reveal:
21. Reasons for Failure of New Ventures
• No prior experience in business line founded.
• Stop gap arrangement till right opportunities surface.
• Diversion of funds for personal use.
• Not seeking and relying on expert opinion.
• Falling in love with one’s own ideas/products.
• Poor financial management practices.
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Other reasons could be…
22. Current MSMEs Products
(Manufacturing)
Food Products Paper Products & Printing
Chemical & Chemical Products Cotton Textiles
Basic Metal Industries Transport Equipment's & Parts
Metal Products Leather & Leather Products
Electrical Machinery & Parts Miscellaneous Manufacturing Industries
Rubber & Plastic Products Other Services & Products
Machinery & Parts Except Beverages, Tobacco & Tobacco Products
Hosiery & Garments - Wood Products Repair Services
Non-metallic Mineral Products Wool, Silk, Synthetic Fiber Textiles
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(Source: Ministry of MSME Report, 2019-20)
23. Current MSMEs Products
(Manufacturing)
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Jute, Hemp And Mesta Textiles Television Sets
Toothpaste And Toothpowder Calculators
Domestic Utensils Microwave Components
Leather And Leather Goods Electro medical Equipment's
Plastic And Rubber Goods Digital Measuring Equipment's
Ready-made Garments Optical Lenses
Hosiery Goods, Sheet Metal Goods Drugs And Pharmaceuticals
Stationery Items Electric Motors
Soap And Detergents Pesticide Formulations
(Source: Ministry of MSME Report, 2019-20)
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Textile Raw fabric and dye production , Processing & Packaging etc.
Renewable Energy Personal protective equipment and safety gear ,Drilling and Mining chemicals etc.
Food and Agriculture
Processed and ready to eat packaged food, Pre-mixes, Bakery and Processed meat , Cold
chain storage, Health food & beverages, Vitamin additives, etc. , Crop chemicals and
nutrients , Poultry, feed and Farm additives
Retail E-commerce, New retail formats etc.
Tourism and Hospitality Equipment, supplies and services ,E-commerce platforms ,Budget hotels, Customer services
Education
PPP models, Technical Training Institutes, ST skill building courses ,Educational content
material development etc.
Real Estate
Low income housing, Prefab structures ,Hospitality, Hotel projects etc., Heating ventilation
and air conditioning (HVAC), Mechanical, Electrical and Plumbing (MEP) etc.
Defense & Aerospace Indian offset partners , simulators and equipment etc.
Energy
Wind energy and Solar energy ,Smart grids, Geothermal and Energy efficiency solutions, Oil
& Gas – Drilling chemicals and equipment etc.
Sector Vs Possible Opportunities
Source: The New Wave Indian MSME , An action agenda for growth, KPMG(2015)
25. 7-Nov-20
Source: The New Wave Indian MSME , An action agenda for growth, KPMG(2015)
25
Telecommunications
Manufacturing of Routers and Switches , Low-cost mobiles and Base transceiver station
equipment.
Electronics Mfg of semiconductors , Components for armed forces , Nano electronics and microelectronics..
IT/ITES Cloud computing , Data analytics services , E-governance ,Mobile apps and Software development.
Media Manufacture of Set-top boxes , New forms of Content delivery for Media companies etc.
Healthcare
Low cost Healthcare & Medical devices (Surgical gloves, syringes) Medical tourism ,Diagnostic
labs
Pharmaceuticals Generics and API manufacturing , Contract research , Nutraceuticals and Nutra- cosmetics etc.
Biotechnology Diagnostic kits, Vaccine exports to developed countries ,Agro-produce , High yield hybrid seeds .
Automotive Automotive Electronic components, Rubber and Chemicals supply to the Tyre manufacturers.
Transport & Logistics Development of new Airports ,Ports and Port services , Green supply chain , Fleet management…
Industrial Mfg Design, Equipment and Supplies , Processing ,Sustainability and Pollution Treatment services.
Chemicals Bio-based raw materials for Oil, Services for Integrated petroleum, chemicals and petrochemicals.
Sector Vs Possible Opportunities
26. Conclusions
• The current economic scenario in India is on expansion and transformation mode providing
umpteen opportunities to entrepreneurs.
• The Indian government has put a number of liberal policies/schemes in place to help new
enterprises.
• Setting up of new ventures will have multiplier effect in employment generation and would
increase per capita income.
• Initiatives like ‘Make in India’, ‘Start-up India’ , ‘Atmanirbhar Bharat’ etc. will encourage and
inspire entrepreneurs to join the band wagon of self reliant Indians.
• Entrepreneurs should be serious , disciplined and committed to the cause of
entrepreneurship. Frivolous and casual attitude would result in failures.
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27. Conclusions
(Continued)
• Being a country with large population, plethora of opportunities are available to offer
products and services in sectors like food, retail , small housing , health, hygiene , power,
tourism, entertainment etc.
• The vibrant ecosystem in place could push enterprising minds to take risks and introduce
exclusive products and services to cater to India’s needs and wants at affordable price.
• Solutions to Indian problems could be replicated in other developing countries with little
tweaking to suit local requirements.
• With IT optimizing employment in various sectors, entrepreneurship should be seen as a
viable alternative for Indian youth, warranting urgent overhaul of university curriculum.
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28. Thank you for your time.
Dr. Gopaldas Pawan Kumar
gdpawan@gmail.com
https://www.researchgate.net/profile/Dr_Gopaldas_Kumar/research
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