Empowering MSMEs With the Ministry of Micro, Small and Medium Enterprises (MSME) in India
The Ministry of Micro, Small and Medium Enterprises (MSME) in India is all set to boost MSMEs, explains 3E Accounting.
The Ministry of Micro, Small and Medium Enterprises (MSME) in India was established in 2007. It is an amalgamation of the older Ministry of Small-Scale Industries and the Agro and Rural Industries. The Ministry now governs all policies related to MSMEs in India.
MSMEs are considered the backbone of most economies, and June 24th is the International Day of MSMEs. Globally, 50% of employment, 90% of all businesses, and 40% of gross domestic products (GDP) are attributed to MSMEs.
The global pandemic has had a repercussive effect on MSMEs – both negative and positive. Their challenges are multi-faceted, including disruption in the supply chain, reduced income, isolation, and a sharp drop in demand. On the plus side, the economic transformation has opened up the world of e-commerce.
Most MSMEs are from India’s rural areas and lack access to digital infrastructure. These MSMEs fall under the exclusive purview of the Ministry and are focused on Khadi and Coir Industries. Khadi is the activity of handmade textiles, while Coir is the manufacturing of coconut husk fibre.
To promote such industries, the Ministry has facilitated the E-Marketplace initiative, giving MSMEs access to online platforms. This initiative is further bolstered by the Credit Linked Capital Subsidy Scheme (CLCSS). This scheme facilitates MSME funding for technological upgrades. MSMEs can also access financial help from the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). This Trust offers collateral-free credit capability to start-up MSMEs.
The Ministry of MSME has been consistent in its policy and governance towards MSMEs in India, focusing on long-term economic recovery. A significant part of the new policy changes has been initiated by input from the SME Chamber of India.
This includes refocusing the Small Industries Development Organisation objectives, which is under the control of the Ministry. Established in 1954, it now has numerous agencies that provide essential services for MSMEs. These include, amongst others, training for entrepreneurship development, consultancy as well as pollution and energy audits.
The Ministry has also introduced a composite classification for MSMEs to streamline governance. It is based on annual turnover and investment in plant and machinery. Currently, the classification criteria are as follows:
- Micro Businesses: annual turnover not exceeding Rs 5 Crore and investment up to Rs 1 Crore
- Small Businesses: annual turnover not exceeding Rs 50 Crore and investment up to Rs 10 Crore
- Medium Businesses: annual turnover not exceeding Rs 250 Crore and investment up to Rs 50 Crore
Another project that the Ministry is actively involved in is coordinating the Rural Employment Generation Programme (REGP) and the Prime Minister’s Rozgar Yojana (PMRY) initiative. These are youth employment programs aimed at fostering interest in MSMEs. They are facilitated with the cooperation of the banking sector and all State Governments.
MSMEs Are the Future
As can be seen, the Ministry of Micro, Small and Medium Enterprises (MSME) in India is going all out to support MSMEs. If you’re looking to be a part of this dynamic sector, engaging business consultants such as 3E Accounting is a prudent move. All matters on company incorporation, accounting, compliance, and even website design and development can be customized to your needs. As consummate professionals with industry experience, 3E Accounting offers cutting-edge solutions to 21st-century business needs.
Contact 3E Accounting today and experience professionalism at its best.