• By the enactment of small and medium enterprises development Act ,2006 the small and medium sector has been defined as small and medium enterprises with effect from OCTOBER 2006 .

• The classification has been done on the basis of investment in Plant and Machinery in case of manufacturing enterprises and investment in equipments in case of services .

These are those Enterprises where the investment in plant and machinery is more than 25 lakh Rs. But does not exceed 5 crore Rs.

Where the investment in equipment is more than Rs 10 lakh but does not exceed Rs 2 crore .

These are those where the investment in plant and machinery is more than Rs. 5 crore but does not exceed 10 crore .

Where the investment in equipment is more than two crore Rs but does not exceed 5 crore Rs .

1.To create permanent employment opportunitiesTo public at large at relatively small costs2.To meet a major part of the increased demand for Consumer goods and simple producer goods .3.To ensure more equitable distribution of national Income to society at large scale .4.To facilitate the mobilisation of resources which mightRemain inaquately utilised .

ROLE OF MSMEs

1.Share in industrial output.2.Employment generation.3.Equitable distribution of national Income.4.Regional dispersal of industries.5.Contribution to Export.6.Less industrial Disputes.

THREATS AND CHALLANGES

1.Finance And credit.2.Infrastructure.3.Availability of Raw material.4.Machines and other equipments.5.Marketting problem.6.Delayed payments7.Problem of sickness.8.Poor Database.9.Other problems.

1.SMe’s are much labour intensive than large scale industry.They provide more scope for the employment of workers .

2.SSI are also substainable as they are essential for combating poverty and employment .

3.The social cost of developing small units specially handicrafts and village industries is lower .

4.Elasticity in technical and economic organisation in SSI is high as compared to large sector concern.

5.SSI are expected to earn more quick returns on capital invested in such industries where; gestation period is quite short in comparison to large scale industries .

This Act was passed on october 2 , 2006.The main features of this act are-

1.Setting up of a National Board for MSMEs.

2.Classification of enterprises

3.Advisory committees to support MSMEs

4.Measures for promotion , development and enhancement of

MSEs

5. Schemes to control delayed payments to MSMEs

SMALL AND MEDIUM ENTERPRISE DEVELOPMENTAL ACT, 2006

BUDGET 2011-2012

1.During 2010-11 Rs 4000 crore was provided to SIDBI for refinancing incremental Lending by banks to these enterprises.For the year 2011-12 the government has Provided Rs 5,000 crore to SIDBI for the Same purpose .2.Handloom weavers have been facing economic stress so the govt. made a Provision of Rs 3crore to NABARD.