Micro, Small & Medium Enterprises (MSMEs) in India : Institutional Framework, Problems & Policies

Micro, small and medium enterprises (MSMEs) have emerged as a highly vibrant and dynamic sector of the Indian economy over the years. MSMEs not only play crucial role in providing large employment opportunities, at comparatively lower capital cost than large industries, but also help in industrialisation of rural and backward areas, thereby reducing regional imbalances, and assuring more equitable distribution of national income and wealth. MSMEs are complementary to large industries as ancillary units and contribute enormously to the socio-economic development of the country. The sector contributes significantly to manufacturing output, employment and exports of the country. MSMEs, though important, face a number of problems which have resulted in their retarded growth. Inadequate working capital, lack of information to access national and international markets, shortage of trained personnel and obsolete technology are the major barriers to the growth of MSMEs in India. In the post-WTO agenda, domestic markets have been opened up for imports, creating severe competition for the local industries. At the same time, it has created opportunities for small industries to tap global markets. Globalisation of the economies across the world has changed the notions of manufacturing, productivity and competitiveness. Flexible production processes and structures are being increasingly put in place to compete in highly dynamic markets where product life is short. Moreover, discerning customers -- with higher purchasing power and more differentiated and international tastes -- are demanding much more product variety, higher quality and greater value for money. The present volume provides an exhaustive analytical account of the functioning of MSMEs in India. It discusses at length their role in the Indian economy, policies and programmes of the Government to promote them, and the problems faced by them in the context of globalisation and liberalisation of world economies.