UN MSME Day

The UN General Assembly in its 74^th Plenary held on the 6^th April, 2017 declared 27^th June as Micro, Small and Medium-sized Enterprises Day, recognizing the importance of Micro, Small and Medium-sized Enterprises in achieving sustainable development goals and in promoting innovation, creativity and sustainable work for all.

Micro, Small and Medium-sized Enterprises

What is a micro-, small, or medium-sized enterprise?

The criteria for defining the size of a business differ from country to country. In India, the definition of micro-, small and medium-sized enterprises is established according to Investment in Plant & Machinery/equipment and Annual Turnover.

• A micro enterprise is an enterprise where the investment in plant and machinery or equipment does not exceed Rs 1 crore and turnover does not exceed Rs 5 crore;
• A small enterprise is an enterprise where the investment in plant and machinery or equipment does not exceed Rs 10 crore and turnover does not exceed Rs 50 crore; and
• A medium enterprise is an enterprise where the investment in plant and machinery or equipment does not exceed Rs 50 crore and turnover does not exceed Rs 250 crore.

All enterprises are required to register online on Udyam Registration Portal and obtain ‘Udyam Registration Certificate’. 

According to the data provided by the International Council for Small Business (ICSB), formal and informal Micro-, Small and Medium-sized Enterprises (MSMEs) make up over 90% of all firms and account on average for 70% of total employment and 50% of GDP.

These enterprises, which generally employ fewer than 250 persons, are the backbone of most economies worldwide and play a key role in developing countries. These types of enterprises are responsible for significant employment and income generation opportunities across the world and have been identified as a major driver of poverty alleviation and development.

MSMEs tend to employ a larger share of the vulnerable sectors of the workforce, such as women, youth, and people from poorer households. MSMEs can even sometimes be the only source of employment in rural areas. As such, MSMEs as a group are the main income provider for the income distribution at the "base of the pyramid".

How they contribute to the achievement of the Sustainable Development Goals

Micro, small and medium sized enterprises are vital in achieving the Sustainable Development Goals, in particular in promoting innovation, creativity and decent work for all.

As we steer our ship into a new development course in a changing world, the importance of Micro, Small, and Medium Enterprises (MSMEs) and the circular economy is crystal clear. MSMEs, which account for 90% of businesses, more than 70% of employment, and 50% of GDP worldwide, remain the core of the economy for most societies.

Efforts to enhance access to finance for SMEs across key sectors of national economies are an important element of implementation of the Sustainable Development Goals (SDGs). SDG targets 8.3 and 9.3 call for enhancing the access of SMEs to financial services. In addition, SMEs are an important element in the implementation of SDG 8 (decent work and economic growth) and SDG 9 (industry, innovation and infrastructure.

Theme for 2024 : MSMEs and the SDGs

The 2024 MSME Day offers an opportunity to discuss and exchange ideas on how key stakeholders, including policy makers, large companies, financial institutions, and the international community can support micro-, small and medium-sized businesses to advance the 2030 Agenda and contribute to achieving the SDGs, including poverty eradication and decent work for all.

Did you know?

• 600 million jobs will be needed by 2030 to absorb the growing global workforce, which makes SME development a high priority for many governments around the world.
• In emerging markets, most formal jobs are generated by SMEs, which create 7 out of 10 jobs.
• Access to finance is disproportionately difficult for smaller firms in the least developed countries (LDCs), with 41 percent of SMEs in LDCs reporting access to finance as a major constraint to their growth and development, by comparison to 30 percent in middle-income countries (MICs) and only 15 percent in high-income countries (HICs).

Source : UN

Initiatives taken by Ministry of MSME in India

Micro, Small and Medium Enterprises (MSME) sector has emerged as a highly growing and dynamic sector of the Indian economy over the last decade. India
has more than 6 crore entities falling under the MSME category.

As per Central Statistics Office (CSO), share of MSMEs in the Gross Value Added (GVA) in All India Gross Domestic Product (GDP) for the year 2021-22 is 29.15%. As on 06.12.2023, the total employment recorded on the Udyam Registration Portal (since inception 01.07.2020 to 06.12.2023) is 15.50 crore.Tthe share of exports from micro, small, and medium enterprises (MSME) specified products in overall Indian exports was 45.56% during April-September 2023. 

The growth of Micro, Small and Medium Enterprises depends on various factors such as access to market, quality of products, availability of timely credit, upgradation of technology etc. For capacity building of Indian MSME sector, Ministry of MSME is implementing various schemes for skill development, technology upgradation, marketing support and access to credit to MSMEs. Besides, a provision has been made in Public Procurement Policy which mandates 25 % of annual procurement from Micro and Small Enterprises (MSEs), including 4% from MSEs owned by SC/ST and 3% from MSEs owned by Women entrepreneurs by Central Ministries/Departments and CPSEs, thus providing marketing opportunities to MSEs for their growth and development.

Six pillars have been identified on which the government's endeavours would be built

• formalization and access to credit
• increased access to market  and e-commerce adoption
• increased productivity through modern technology
• enhanced skill levels and digitalization in the service sector
• support to Khadi, Village, and Coir industry to globalize them
• empowerment of women, artisans, through enterprise creation. 

Major schemes for MSME sector

• Prime Minister’s Employment Generation Programme (PMEGP) which is a major credit-linked subsidy programme aimed at generating self-employment;
• Pradhan Mantri Mudra Yojna (PMMY) for providing loans up to Rs. 10 lakh, to non-corporate, non-farm micro/small enterprises;
• Strengthen credit delivery system and to facilitate the flow of credit to the Micro and Small Enterprise sector without the hassles of collateral and third party guarantee, up to a maximum of  Rs. 5 crore through Credit Guarantee Scheme;
• The 'PM Vishwakarma' scheme, launched during 2023 by the Government of India, aims to enhance the quality and reach of products and services by artisans and craftspeople, integrating them into domestic and global value chains.
• Rs. 50,000 crore equity infusion through Self Reliant India (SRI) Fund;
• Launch of Udyam Assist Platform on 11.01.2023 to bring Informal Micro Enterprises (IMEs) under the formal ambit of  MSME for availing the benefits under Priority Sector Lending;
• Inclusion of Retail and Wholesale traders as MSMEs for the purpose of availing Priority Sector Lending benefits, w.e.f. 02.07. 2021;
• Non-tax benefits extended for 3 years in case of an upward change in status of MSMEs;
• Trade Receivable Discounting System (TReDS) to facilitate the financing of trade receivables of MSMEs from corporate and other buyers including government departments and public-sector undertakings (PSUs) through multiple financiers electronically.
• Collateral free loans up to Rs. 500 lakhs (from April 1, 2023) with guarantee coverage up to 85% through CGTMSE.
• Rs. 50,000 crore equity infusion through Self Reliant India Fund, including a Rs. 10,000 crore corpus from the Government of India.
• Exemption from global tenders for procurement up to Rs. 200 crores.
• Roll out of Raising and Accelerating MSME Performance (RAMP) programme with a Rs. 6,000 crores outlay over 5 years.
• Integration of Udyam Portal with the National Career Service (NCS) to enable registered MSMEs to search for jobseekers.
• Relief under Vivad se Vishwas – I, including a refund of 95% of performance security, bid security, and liquidated damages for MSMEs, and relief for debarred MSMEs due to contract execution defaults.
• Samadhaan Portal introduced from October 30, 2017 for monitoring outstanding dues to MSEs from buyers of goods and services.