here in the slide, I have presented all the necessary information regarding MSME i.e Micro, Small & Medium Enterprises. From the opportunities, challenges to the benefits of MSMED act, loan schemes, projects that the FMC has submitted till date are all presented. although I couldn't provide all the happenings in MSME this presentation can be named as MINI WIKI for MSME. in recent days msme has contributed a lot to the Indian economy and makes it stronger. also, the MSME sector provides huge employment that has surely lower down the tension of the govt. e6arao aro onek ki6u a6e, jeta apnara net ghatle bujhte parben, apatoto ja korar ata diei korun. porer ta pore dekha jbe
1. MSME – AN ENTREPRENEURSHIP
DEVELOPMENT PRESENTATION
Presented by,
Shubhadeep Saha
NIILM CMS
Batch: 2017-19
2. What is MSME
• It is stands for Micro, Small & Median Enterprises
• It contributes a lot to develop the economy of India every year
• The Ministry of MSME is a branch of the Govt. of India and is the apex body for the formulation and
administration of rules, regulations and laws relating to micro, small and medium enterprises in India
• The ministry of MSME is currently run by Mr. Giriraj Singh since 3rd September, 2017
3. History
• Clusters of micro, small and medium enterprises (MSMEs) are found in abundance across the globe
more than 9 years ago
• The Foundation for MSME Clusters (FMC) was conceptualized to contribute towards this process of
cluster based development of MSMEs
• The United Nations Industrial Development Organisation (UNIDO) conceptualized and initiated the
process of creating the Foundation for MSME Clusters (FMC)
• The Foundation for MSME (FMC) was supported by Ministry of Small Scale Industries (SSI), UNIDO
& Entrepreneurship Development of India and was legally constituted in 2005
• The Ministry of Small Scale Industries and Agro and Rural Industries (SSI&ARI) was created in
October 1999. In September 2001, the ministry was split into the Ministry of Small Scale Industries
(SSI) and the Ministry of Agro and Rural Industries (ARI)
• The President of India amended the Government of India (Allocation of Business) Rules, 1961, under
the notification dated 9 May 2007. Pursuant to this amendment, the ARI and SSI were merged into a
single ministry, the current MSME
4. Important Info.
• First Ever International SME Convention-2018 is held in New Delhi. More than 150 participants from
31 countries and 400 entrepreneurs from India took part in the International SME (Small Medium
Enterprises), 2018.
• FMC (Foundation of MSME Clusters) has worked on various projects spread over 15 countries with a
vision of contributing towards on economically progressive, socially connected and environmentally
sustainable world
• The projects done by FMC covers most of the industries of today’s market. For e.g.
• Energy & Environment
• Infrastructure
• Policy and Research
• Training & Capacity Building
5. Types of Industries - MSME
MSME India has gone through the MSME act 2006 that classified the type of
industries MSME should have and also the limitation. In 2015, the government has
introduced an amendment bill to change the limit in all categories and it was adopted
in February 2018 The classification is as follows:
TYPE
NEW CLASSIFICATION
(ANNUAL TURNOVER)
Previous classification –
Investment in Manufacture
industry (in ₹)
Investment in
Service industry
MICRO Not exceeding ₹5 crores Below ₹25 lakhs Up to 10 lakhs
SMALL
Between ₹5 crores to ₹75
crores
₹25 lakhs – ₹5 crores
Above ₹10 lakhs to
₹2 crores
MEDIUM ₹75 cr. - ₹250 crores ₹5 crores to ₹10 crores Above ₹2 cr. to ₹5 cr.
6. Micro Enterprises
• Generally a small business employing 9 or fewer people
• Have a balance sheet or turnover less than a certain amount (up to ₹5 crores)
• Investment for micro enterprises is up to ₹25 lakhs for Manufacture industry and up
to ₹10 lakhs for Service industry
• Instead of being small business, Micro Enterprises can make development to the
economy
• The types of micro-enterprises are as follows:
• Street vendors
• Carpenters
• Plumbers
• Independent mechanics
• Machine shop operators
7. Small Enterprise - MSME
• A business that employs a small number of workers (not more than 50) and does
not have high volume of sales
• In technical terms, it is an independently owned and operated company that is
limited in size and in revenue depending on the industry
• Such enterprises are usually privately owned sole proprietorships, corporations or
partnerships
• The annual turnover for a small enterprise is between ₹5 crores to ₹75 crores and
investment id between 10 lakhs to 5 crores, varying from industry to industry (
service, manufacturer)
• There are various types of small enterprises. For eg:
• Privately owned restaurants
• Law firms
• Engineering and Architectural firms
• Motels
8. Median Enterprises - MSME
• A medium sized business with not more than 250 employees
• An annual turnover between ₹75 crores to ₹250 crores
• Investment varies from industry to industry. For manufacture companies, it is b/w
₹5 crores - ₹10 crores and for the service industry, ₹2 crores - ₹5 crores
• Types of median enterprises:
• ITES co.
• Small Consultancy firms
• Internet business
• Brick and mortar business etc.
9. Characteristics of MSME
• Creates large scale employment
• Makes the economy stable in terms of growth
• Production cost is low
• Opens a great opportunity for the entrepreneurs in India
10. Objectives of MSME
• To create immediate employment opportunities
• To make small industries export oriented
• To encourage growth in village and small towns
• To remove economic backwardness
• To provide steady source of income to the low income group
11. Highlights of MSME
• MSMEs contributes about 40% of India’s total exports.
• MSMEs contributes about 45% of India’s manufacturing output.
• This sector has given employment to 73 million people.
• MSME manufacture more than 6,000 products.
12. Opportunities of MSME
• Less capital intensive
• Most important employment generating sector. It provides 50% of private
sector employment
• Effective tool for promotion of balanced regional development
• It is extensively promoted and supported by the Government
• Finance and subsidies are provided by the government
• Produced goods are purchased by the Government
• 40% exports in India are through MSME channel
• Procurement of machinery and raw material
• Globalization has offered new opportunities for the MSMEs
• Trade fares and exhibitions played a vital role in the economic growth of the
countries
13. Challenges faced by MSME
• Absence of adequate and timely banking finance
• Limited capital and knowledge, non-availability of suitable technology
• Low production capacity
• High cost of credit
• Ineffective marketing strategy
• Lack of skilled man power for manufacturing, services, marketing etc.
• Lack of access to global markets.
• Constraints on modernization of expansion.
• Problems of storage, designing, packing and product display.
• In adequate infrastructure facilities, including power, water, roads.
15. Benefits of MSME under the MSMED Act, 2006
The MSMED Act provides a legal framework to the concept of Enterprise, which includes
manufacturing as well as service sectors. The MSMED Act also provides for the
• establishment of a National Board for Micro, Small, and Medium Enterprises
• measures for promotion, development and enhancement of competitiveness of micro,
small and medium enterprises
The benefits of the MSMED Act 2006 are as follows:
• Preference in procuring Government tenders (procure min. 20% of total annual value of
goods and services from MSME)
• Protection against the delay in payment from Buyers (payment can exceed no more than
45 days)
• Right of interest on delayed payment (on failed payments, buyer will be liable to pay
compound interest with monthly rests to the supplier on the amt. from the date falling
after due date)
• Time-bound resolution of disputes with Buyers through conciliation & arbitration (MSE
can refer the dispute to the MSE Facilitation Council)
16. MSME Schemes
To attract more youths into this industry, the govt of India proposes a lot of schemes
for MSME, which are as follows:
• SME Division Scheme
• Providing financial assistance on International Cooperation
• Assistance to Training Institutions Scheme (ATI Scheme)
• Marketing Assistance Scheme
• Development Commissioner (DC-MSME) Scheme
• Credit Guarantee Scheme: Collateral free loans up to a limit of ₹50 lakhs - for
individual MSEs
• ISO 9000/ISO 14001 Certification Reimbursement Scheme
• MSME Market Development Assistance (MDA)
• NSIC Schemes
• Performance and Credit Rating Scheme
• Raw Material Assistance Scheme
17. • ARI Division Scheme
• Prime Minister Employment Generation Programme (PMEGP)
• Janshree Bima Yojana for khadi artisans
• CSS of Export Market Promotion
• Ministry of Agriculture - Enterprise Development (Direct/Indirect)
• Agricultural Marketing Divisions scheme (Marketing Research and Information
Network)
• Gramin Bhandaran Yojana: A Capital Investment Subsidy scheme for
Construction/Renovation of Rural Godowns
• Development/Strengthening of Agricultural marketing infrastructure, Grading &
Standardisation
18. Banks that provide loan to MSME
• Allahabad Bank
• Oriental Bank of Commerce
• Bank of Baroda
• Andhra Bank
• Bank of India
• Bank of Maharashtra
• Canara Bank
• Dena Bank
• SBI
• Central Bank of India
• IDBI Bank
19. MSME (Micro Small and Medium Enterprises) Loan
Scheme
Credit Guarantee Fund Trust for Micro and Small Enterprises was set up by Ministry of
MSME, Government of India and SIDBI. The main aim was to facilitate flow of credit to MSME
sector without the need for collateral or any third party guarantee. The objective of the scheme is to
give importance to the project viability and secure the credit facility on the asset that is being
financed.
The Guarantee Trust will make good the loss if the borrower fails to discharge his
liability. Up to 85% of the outstanding amount that is defaulted and the loss incurred by the lender
will be covered by the Guarantee Trust. Credit Guarantee Fund Trust for Micro and Small
Enterprises will cover for credit facilities up to ₹10 Lakhs that the lender has funded without any
collateral or third party guarantee. To avail the guarantee cover, Credit Guarantee Fund Trust for
Micro and Small Enterprises charges an annual service fee. This fee is borne by the borrower.
The fee that is payable to the Trust is one-time guarantee fee of 1.5% and annual service
fee is 0.75% on credit facilities sanctioned. For loans up to ₹5 lakh, the one-time guarantee fee is 1%
and annual service fee is 0.5%. For loans in the North-east Area, the one-time guarantee fee is set at
0.75%.
20. MSME Loan Eligibility criteria
The MSME Loan is offered to the priority sector. The priority
sector impacts a large section of the population, the weaker sections
and sectors that are employment intensive such as
• Agriculture
• Education
• Housing
• export credit
• micro and small enterprises and others as expressed by the
government.
21. MSME Loan Limit and Interest Rate
Certain targets are set for banks’ lending to the Micro and Small Enterprises. The
banks’ have to achieve a 20% growth in credit to micro and small enterprises and 10%
annual growth in the number of micro enterprises accounts and 60% of total lending to
Micro and Small Enterprises sector. The banks have to follow the following:
• 40% of the total advances must go to micro and small enterprises involved in
manufacturing having investment in plant and machinery up to ₹10 lakh and for service
enterprises having investment in equipment up to ₹4 lakh.
• 20% of the total advance to micro and small enterprises should go to manufacturing
enterprises that have above ₹10 lakh till ₹25 lakh investment in the plant and machinery
and for service enterprises that have investments in equipment above ₹4 lakh up to ₹10
lakh
• To simplify, 60% of the advances must go to micro enterprises
22. MSME Loan Application
The MSME Loan application requires to fill in the following details:
• Application date.
• Name of the enterprise.
• Registered office address.
• Address of the factory or shop.
• If the enterprise belongs to SC/ ST/ OBC/ Minority community
• Telephone number.
• E-mail address.
• Mobile number.
• PAN Card number.
23. • Constitution (proprietorship, partnership firm, private limited company, limited company,
cooperative society).
• Date of establishment
• State where the business is located.
• Branch where the business is located.
• Name of proprietors or partners or directors along with their age, academic qualification,
address, telephone number and experience.
• Existing activity.
• Name of associate concerns and nature of association.
• Mention the existing credit facilities, if any.
• List out the proposed credit facilities.
24. Security & Other services offered to MSE Entrepreneurs
• Security
• Banks are instructed not to accept collateral in the case the loan amount is up to
₹10 lakhs. If the track record of the borrower is good, the limit may be increased
loans up to ₹25 lakhs
• Other Services
Apart from offering loans to MSE Entrepreneurs, the banks will also provide the
following:
• Rural Self-Employment Training Institutes: Here short duration skill upgradation
programmes are conducted to help the existing entrepreneurs to keep up with the
changing global market.
• Financial literacy and consultancy support: Through Financial Literacy Centres,
banks provide assistance to MSE entrepreneurs with financial, operational skills
that includes accounting, finance, business planning
25. Restructuring of Sick Units
A Micro or Small Enterprise is said to be sick if the any of the borrowal account of the
enterprise remains NPA for 3 months or more or if there is erosion in the net worth due to
accumulated losses to the extent of 50% of its net worth.
The symptoms of sickness are as follows:
• Lack of healthy movement of stocks and rising level on inventory.
• Inability of the party to promptly honour the cheques.
• Delayed submission of stock statements.
• Unhealthy fluctuations in CC account.
• Default in paying the interest charged on the borrower’s account.
• Frequent request to grant excess limit without corresponding increase in sale.
• Capacity utilization is low.
• Current ratio is poor.
If the units are deemed sick, then they must be restructured with proactive approach to avoid
further deterioration
26. Effects of 2018-19 Union Budget on the MSME Sector
• Indian Finance Minister - Mr. Arun Jaitley - introduced a number of proposals
targeting the Micro, Small, and Medium Enterprise (MSME) sector during the 2018-19 Union
Budget held on 1 February 2018.
• Being one of the major sectors for growth and employment in the country, the Government
plans to improve the financing for the capital requirement of the industry.
• In addition to MSME, the Union Budget also focused on the agriculture, health, finance,
infrastructure, social protection, education, employment, and other sectors.
• During the meeting, the minister also voiced his proposals regarding health and educational
cess, tax, and initiatives to improve the cash economy of India.
27. Highlights of the 2018-19 Union Budget on the MSME
Sector
• The Union Budget of the upcoming fiscal year aims to improve the financing for MSMEs by
offering prompt loans, incorporating policies for non-performing assets, and reducing tax
burden.
• The meeting also indicated a review of refinancing policies and eligibility criteria for Non-
Bank Finance Companies (NBFCs).
• The Finance Minister also mentioned that the policies and institutional development
measures for Fintech companies might also be revamped to promote their growth.
• Apart from launching the ‘‘Start-Up India’’ program, the Government intends to encourage
the Venture Capital Funds (VCF) and the angel investors by introducing policies and an
exclusive taxation system directed towards alternative investment funds.
• For the forthcoming 3 years, the Government proposes to contribute 12% of the earnings of
new employees of all sectors towards Employees' Provident Fund (EPF).
• The Employees Provident Fund and Miscellaneous Provisions Act, 1952 will be amended to
reduce the employee contribution for female workers to 8% for the first 3 years of
employment. However, the employers’ contribution towards the EPF will remain unchanged
at 12% or 10% in this case
28. News About MSME (Micro Small and Medium
Enterprises) Loan
• The central government of India is planning to double the credit guarantee to ₹40,000 crore
for micro and small enterprises during the financial year 2018-19 under the Credit Guarantee
Fund Trust for Micro and Small Enterprises scheme.
• As per the statements of A.K.Panda - Secretary of Ministry of Micro, Small, and Medium
Enterprises - at a press conference on 27 June 2018, this move is mainly targeted towards the
NBFCs that majorly offer credit to the micro enterprises.
• Additionally, the government intends to increase the total lending per year to the sector
including non-banking financing companies (NBFCs) to ₹55,000 crore from the previous
₹19,000-20,000 crore.
• The ministries of MSME and AYUSH have partnered to help with the growth of AYUSH
Enterprises within the country. Even though the company is generally dominated by
MSMEs, the MSME ministry will help frame new plans for it so that it can enjoy the benefits
offered by lenders to small industries.
• In addition to public and private-sector healthcare delivery centres, the AYUSH Industries
also holds multiple Ayurveda, siddha, unani, homeopathy drug manufacturing units.
Furthermore, AYUSH products such as herbal extracts food supplements, and nutraceuticals
have also been gaining popularity globally in the recent times.
29. MSME Institutes
• Technology Centres (earlier known as Tool Rooms/Technology Development Centres)
• Central Tool Room & Training Centre, (CTTC), Bhubaneswar
• Indo Danish Tool Room, (IDTR), Jamshedpur
• Central Tool Room & Training Centre, (CTTC), Kolkata
• Indo German Tool Room, (IGTR), Aurangabad
• Fragrance & Flavour Développent Centre (FFDC), Kannauj
• Institute for Design of Electrical Measuring Instruments (IDEMI), Mumbai
• National Institute for Micro, Small and Medium Enterprises (NI-MSME)
