Empowerment OF MSME

INDEX:
1. What is MSME & Its role in country
2. Problem facing by MSME
3. Solution to the problem
4. Empowerment of macro & micro economy

Empowerment of MSME
The Government of India has enacted the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 in terms of which the definition of micro, small and medium enterprises is as under:
(I) Enterprises engaged in the manufacture or production, processing or preservation of goods as specified below:
(i) A micro enterprise is an enterprise where investment in plant and machinery does not exceed Rs. 25 lakh;
(ii) A small enterprise is an enterprise where the investment in plant and machinery is more than Rs. 25 lakh but does not exceed Rs. 5 crore; and
(iii) A medium enterprise is an enterprise where the investment in plant and machinery is more than Rs.5 crore but does not exceed Rs.10 crore.
(II) Enterprises engaged in providing or rendering of services and whose investment in equipment (original cost excluding land and building and furniture, fittings and other items not directly related to the service rendered or as may be notified under the MSMED Act, 2006 are specified below.
(i) A micro enterprise is an enterprise where the investment in equipment does not exceed Rs. 10 lakh;
(ii) A small enterprise is an enterprise where the investment in equipment is more than Rs.10 lakh but does not exceed Rs. 2 crore; and
(iii) A medium enterprise is an enterprise where the investment in equipment is more than Rs. 2 crore but does not exceed Rs. 5 crore.
Ministry of Agro and Rural Industries and Ministry of Small Scale Industries have been merged into a single Ministry, namely, “MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES”. The major advantage of the sector is its employment potential at low capital cost. The labour intensity of the MSME sector is much higher than that of the large enterprises. AS per statistics SME is responsible for 8 % of India GDP, Account for 45% of manufacturing sector & around 40% of total export of country. MSME are going to be useful for almost all countries for giving employment to the large number of people & at the same time it give power to economy.
We commonly used this Micro, Small and Medium Enterprises term as SME. Entrepreneurship is vital for economic growth and development. The creation of new business entities generates value added, fiscal revenues, employment and innovation, and is an essential ingredient for the development of a vibrant SME sector. This module will review good practices in entrepreneurship development, propose checklists of suggested policy options and recommended actions, and discuss methods for monitoring and evaluation. It will also show how fostering an entrepreneurial culture that positively values entrepreneurs and entrepreneurship is a key determinant of economic success and it is also a crucial factor to overcome the culture of dependency – either from governments or aid donors.

We are clear about role of MSME in any country. Now let’s move to the number of hindrance of for these MSME: (I) Conflicts between the Institute: In India as many as four or five institutions such as ministry of trade and industry, local government, rural development institutions, women's affairs ministries and others; each doing the same thing without adequate consultations and harmonization. (II) The major constraint faced by SMEs in India is "Power" i.e. * Man Power: As in India cheap labour is available but when we are talking about some skilled worker there is always scarcity. Manpower shortage is the bigger issue for those SMEs which have matured and willing to grow. Manpower in numbers is not a problem. The biggest problem faced by SMEs is skilled manpower – welder, fitter, and machinist. Despite being skilled, they have problems of attitude and lack motivation and the right mindset. The middle level management is the problem. The single man keeps running here and there. Whether we make a pen or an aero plane, the activities are same, only the magnitude / volume changes. We can borrow money from other country or bank and agency but we cannot borrow the skills from outside. * Electric Power: As in India there is always scarcity of electricity, because of which in many parts production has been hampered, companies are closed down for days which decrease competencies of the companies in market. * Money Power: The start-up entrepreneurs need venture capital. Since the risk involved in very high, many have put their own private capital. It is not the investment in infrastructure or buying machine, it is the working capital also. The capital is required to run the organization. As these MSME needs microcredit but which is not easily available, even many times they do not get it on time & these industries become sick & eventually died. * Visualising & Marketing Power: To market any commodity we need a brand name which is difficult to get in the beginning. There are not enough funds to invest in brand building. MSMEs face is failure to visualize and effect the change. (III) Lack of technology: AS business sometimes grows but mostly Technology is costly & complex in nature we never use it & ultimately our product become obsolete in the wrong run due to the quality, operation losses etc (IV) Worse state of women lead business: women owned and managed enterprises have low growth rate as compared to male headed enterprises is not as straightforward as some suggest the main reasons being lack of credit, skills and markets. Although these are important factors that can influence the growth of enterprises, the reasons for female led enterprises low growth are intertwined in economic, cultural and social dynamics. Even there is little confidence among policy makers about their ability to contribute to the growth of the economy. (V) Long term credit from big players: AS many big players in automation used to collect material from these MSME in credit period of 90-120 days. It hampers liquidity of these MSME.

Now we will find some solution to mitigate these problems: (I) Improve the Infrastructure bottleneck: In any country to do the business what matters is the Infrastructure. As you know without infrastructure is almost impossible to do the business to its ultimate potential. If we take the example of “Delhi-Mumbai Industry Corridor”. In this project there are number of new planned cities going to be form, it will give birth to almost thousand of new businesses (majorities will be MSME). It will provide number of warehouses, cold storage which will be helpful for FMCG industries & E-Commerce market. Even Government activities like Food security bill will also be benefited by mitigating losses of excess food. (II) Use the concept of Grameen Bank: Government can use the concept of Nobel laureate Muhammad Yunus led Grameen bank concept while dispersing loan specifically to the women led businesses which will cover economic, cultural and social dynamics (III) Crate backup of skilled labour: With the help of government & private player we will build vocational courses training institute. Provide training to the women regarding various work skills. These institutes will be in close proximity of these MSME areas, so can do the number of project with these areas by the application of practical & theoretical knowledge. As these institute are already present in our country but not yet fully useful. We will provide them financial stipend to these student so they will do this work by motivation & with this may be we will get some new invention or business which will become fruitful in future. (IV) Harmonise the government bodies: As we know the SIDBI, NABARD & Ministry of MSME is working for the nourishment & improvement for these MSME. So we will generate harmony between their activities by mitigating duplicate effort & by coordinating effort on common cause we can target on productive work rather than wasteful resources (V) Easy microcredit: RBI need to tackle this microcredit problem through 2014 new banking license, as these new banks main goal is financial inclusion. They can do this microcredit function properly without bottlenecks which government faced usually in past years. Financial institutions shall constantly develop specialty products based on the characteristics of small and micro-sized enterprises of different types and in different development stages, and provide them with tailor-made financial products and services. (VI) Making industry friendly law: For increased export & increase the sell inside the country government need to provide support by favourable import –export law. Government need to provide security to this business by passing laws which can become import costly/competitive for providing umbrella to these industries because many times imported (Chinese) product damage the market. By considering limitation by the world trade organisation (WTO) (VII) Technology support: As due to Cloud Computing the use of technology for the business activities like sale, ERP, manufacturing etc. becoming simple & cost friendly which will impact total production of the business .It will give price & quality competitiveness in the market (VIII) Listing on foreign Index: MSME’s are struggling to increase caital. Now government & RBI had passed law that these companies can listed themselves outside the nation without being listed on Indian index (IX) Government Initiative: Single window clearance for project. Ministry of Science and Technology (DST, DBT, DSIR) has evolved several measures and programmes for technological assistance and development and transfer of technologies for SMEs. Some of the economic ministries such as Ministry of Textiles, Department of Food Processing and Department of Handicrafts etc. have also recently announced initiatives for technical assistance in various firms. (X) MSMED Act 2006: The MSMED Act was framed with the objective of To facilitate the promotion and development of micro, small and medium scale enterprises (MSM enterprises);To enhance the competitiveness of MSM enterprises; To concentrate on the related matters of MSM enterprises; To extend the scope of benefits from SSI undertaking and ancillary industries to MSM enterprises. (XI) Banking Initiative: Large and medium-sized banks are encouraged to accelerate the development of specialized agencies for small and micro-sized enterprises and extend service outlets to lower levels, so as to raise the volume and scale of financial services for such entities.Small and micro-sized enterprises shall continue to be exempted from administrative and institutional fees under the management, registration and licensing categories.
Use the state council meeting for each year may be at the January of Each year for following things: * The general situations, achievements and problems of financial services for small and micro-sized enterprises in their respective regions in the preceding year; and * Plans for the next stage and relevant suggestions (XII) Electronic platform foe MSME:Use the Mexican development bank Nafinsa’s Creation of an electronic platform for MSME.The clearing corporation of India like BSE,NSE cited as potential platformfor auctioning receivable but still little problem of absense of liquidity make it difficult for MSME as profit margi are wafer thin By using above solution we can achieve below things: