Last Updated : 01 September 2008 at 21:30 IST
The importance of MSMEs for Indian economy
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By Col. Ajay
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Micro, Small and Medium Enterprises (MSMEs) have a very important role to play in ensuring that processes of economic growth in our country are inclusive, employment-friendly and they contribute to greater regional balance in levels of development. The National Common Minimum Programme (NMCP) underscores this important fact. I am, therefore, very happy to say that in the last four years we have accomplished much in keeping with our commitments to our people.
We have been able to address longstanding issues through major institutional reform measures. The enactment of the Micro, Small and Medium Enterprises Development Act, amendments to the Khadi and Village Industries Commission Act, announcement of a comprehensive Package for Promotion of Micro and Small Enterprises and setting up of a National Commission for Enterprises in the Unorganized Sector have all helped in strengthening this important sector and creating the national awareness about its growing importance in our national economic life.
The National Manufacturing Competitiveness Programme has contributed to the graduation of tiny and small scale units in micro and medium enterprises and in the process strengthened the industrial base of our economy.
The very positive contribution that this sector makes to employment is of utmost importance to our vision of shared and equitable growth. This sector provides employment to over 42 million people. It contributes about 45% of the total manufacturing output and nearly 40% of India's exports.
It is the capacity of this sector to generate economic activity at the local level that prompted Gandhiji to give the pride of place to Khadi. He dreamt of an India comprising of self contained villages using local raw materials, local skills, serving local markets and providing employment to people locally near the places where they live. “Khadi’ as a component of Swadeshi was important to Mahatma Gandhi as a symbol of employment that could be generated locally.
It is, therefore, gratifying to note that the Khadi and Village Industries which constitute an integral component of the MSME sector are now finding and experiencing a revival in a world that is becoming increasingly sensitive to organically produced materials and goods. Our innovative entrepreneurs and designers are taking Khadi to its rightful place as a fabric of enlightened choice.
I understand that the Ministry of MSME is conducting a number of programmes for skill development through its National level Entrepreneurship Development Institutes, MSME-Development Institutes, Tool Rooms and Training Centres.
These impart training in the skills to nearly two lakh persons annually but we need to scale up this effort in a big way. I have been told that free training is being provided to the marginalized sections of the society including SC/ST, women and the physically challenged.
To provide handholding support to the trained persons in setting up their own enterprises, the Ministry has also launched a new scheme, namely, Rajiv Gandhi Udyami Mitra Yojana. All of these are commendable steps which need to increase in scale in years to come.
In addition to its role in employment creation, the MSME sector also provides vital components and accessories to the large manufacturing sector. In this way it contributes significantly to the process of rapid industrialization. This sector has shown continued dynamism in terms of growth in the number of enterprises, production, and the capacity to contribute to manufacturing output and exports.
There were apprehensions about the impact of liberalization on the growth of this sector. However, experience during the past decade has amply demonstrated that this sector can not only survive competition, but can also grow faster than the overall manufacturing sector.
This demonstrates the high degree of resilience, entrepreneurial skills and the capacity for adaptation of people operating in this important sector. I wish to congratulate entrepreneurs of this sector for making the opening up of the economy a challenge and also an opportunity to exhibit and display their inherent dynamism. I am sure this sector will continue to do well in the future also.
The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 has broadened the definition as well as coverage of the micro and small enterprises. They now include service enterprises which account for as much as 55 per cent of India’s Gross Domestic Product.
The Act has also for the first time defined medium enterprises. To capture comprehensive data for the sector, our Government has launched the 4th Census of MSME sector. This Census would collect detailed information on all relevant parameters pertaining to this sector, including khadi and village industries and coir industries. I am hopeful that the insights gained through this exercise will help us in formulating fresh policy initiatives and improving implementation of the existing policies and programmes.
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