ROLE OF SMEs IN INDIAN ECONOMY

Monirba {Allahabad university} Supported by – Manish kanojia (MBA III sem}

BY-

MANISH KANOJIA MBA III SEM.

DEFINITION: A) MANUFACTURING ENTERPRISE :-

SEC – 65 {A} 1&3

A small enterprise, where the investment in plant and machinery is more than twenty five lakh rupees but does

not exceed five crore rupees

where as

A Medium enterprise, where the investment in plant and machinery is more than five crore rupees but does not

exceed ten crore rupees;

B) SERVICE ENTERPRISE :-

SEC 65 {B} 1&3 -

A small enterprise, where the investment in equipment is more than ten lakh rupees but does not exceed two crore rupees;

where as

A medium enterprise, where the investment in equipment is more than two crore rupees but does not exceed five crore rupees

PERIODIC REVISIONS OF DEFINITIONS OF SMEs

1950-51 1958-59

Capital assets not exceeding Rs. 0.5 million.

Employment less then 50 workers per day {with use of power} or less than 100 workers per day{without use of power}

Capital investment is less than Rs. 0.5 million.

As it was in 1950-51, per day employment criteria was replaced by a “per shift” provision.

Contd……………………

1980-81 1987-98

Up to Rs. 2 million only.

Units located in rural areas/towns with a maximum population of up to 50,000 as per 1971 census.

Up to Rs. 30 million

Government of INDIA has since decided to lower the ceiling from Rs. 30 million to Rs. 10 million.

Contd……………………….

1999-2000Up to Rs. 10 million

The limit for the units in selected products of knit wears and hand tools was allowed up to Rs. 50 million.

OBJECTIVES:

Creating permanent and immediate employment.

Meeting major part of increased consumer demand.

Facilitating mobilization and exploitation of resources.

Integration and development of industries with rural economy.

Ensuring equitable and justifiable distribution of national income.

ROLE OF SMEs IN INDIAN ECONOMY

EMPLOYMENT GENERATION:

Employment opportunities created in different regions:

Tamil Nadu (14.5%) Maharashtra (9.7%), Uttar Pradesh (9.5%) West Bengal (8.5%) Gujarat (7.6%) Andhra Pradesh (7.5%) Karnataka (6.7%)and Punjab (5.6%)

PRODUCTION:

Increment in production:SMEs Contribute 40% of the gross manufacture

to the Indian economy.

An increment of 31.21 lakh in 1999.

EXPORT :

Cont…………….45% - 50% of the Indian Exports is being

contributed by SMEs .

The product groups where the SMEs dominates in exports, are

-sports goods, readymade garments, woollen garments and knitwear, plastic products, processed food and leather products. 

GROSS DOMESTIC PRODUT:SME Contribution to GDP:

The total production of SMEs was 61,228 crores in 1985-1986 which rose to 6, 25,000 in 2000-01.

The Eleventh Plan, therefore, aims at an increase in

investment in the private sector to 28.7% from an average of 25.1%in the Tenth Plan.

SMEs Contribute to 9% of GDP of INDIA , It contributes 40% of the gross manufacture to the Indian economy.

ECONOMIC INDICATORS:Small & medium enterprises have emerged as a

dynamic and vibrant sector of the economy.

- Today, it accounts for nearly 35% of the gross value of output in the manufacturing sector and over 40% of the total exports from the country. 

- In terms of value added this sector accounts for about 40% of the value added in the manufacturing sector. 

Opportunity:

The opportunities in the small-scale sector are enormous due to the following factors:

Less Capital IntensiveExtensive Promotion & Support by

GovernmentGrowth in demand in the domestic market

sizeRaw Material ProcurementManpower Training

Per capita income

Social justice.

LIST OF ITEMS RESERVED FOR EXCLUSIVE MANUFACTURE IN SMALL SCALE SECTOR

Food and allied industriesTextile products including hosieryWooden and wood productsPaper productsRubber products etc.

IMPORTANCE OF SMEs:

SMEs are much labour intensive than large scale.

Elasticity in SMEs are higher than large scale concerns.

Capacity to adjust with changing environment.

SMEs are expected to earn more quick returns.

Essential for combating poverty and unemployment.

CONCLUSION:-

The SMEs, in particular, have a vital role to play in making

the growth regionally balanced, and in generating widely

dispersed off-farm employment, some of it in rural areas.

SMEs are expected to create the bulk of new employment, it

is particularly important to make the financial system more

efficient in meeting the needs of our expanding private

sector, and to ensure financial inclusiveness.

BIBLIOGRAPHY:-

INDIA 2009 -(MINISTRY OF INFORMATION &BROADCASTING)

Economic Survey 2008-2009Entrepreneurship and small business

management :- M.B. SHUKLAMINISTRY OF SMALL AND MEDIUM

ENTERPRISE: www.dcmsme.gov.in www.google.com www. Wikipedia.com