Msmes In India - Growth,challenges And Issues In Present Scenario

Authors: Toran Lal Verma, Dr. D.K. Nema, Mr. Rahul Pandagre

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Abstract

Micro, Small and Medium Enterprise (MSME) sector has emerged as a highly vibrant and active sector of the economy. MSMEs play avital role in providing huge employment opportunities at relatively lower cost than large industries. MSMEs are helping in the industrialization of rural & backward areas by reducing regionalimbalances, assuringevenhanded distribution of wealth and income. MSMEs are ancillary to large industries and contribute highlyto the socio-economic development of the country. The MSMEs are widely dispersed across sectors of the economy, producing avaried range of products and services. The MSMEs contribute to 6% of GDP, 33% of total manufacturing and 45% of total export. On one hand MSMEs are growing at brisk pace, but on the other hand,they are struggling to continue their operations due to various problems. Majority of MSMEs lack finance to run their business and ultimately becomes sick. With the growing industrialization and globalization,there are aplethora of opportunities for MSMEs. But these opportunities cannot be harnessed until these MSMEs are provided sufficient support. The present paper tries to study the growth of MSMEs in India and highlight various issues related to MSMEs in present scenario.

Introduction

MSMEs have become theengine of economic growth in India. MSMEs in India constitute more than 90% of the total number of industrial enterprises and form the backbone of industrial development. Not only in India, MSME sector well recognized all over the world, owing to its significant contribution to employment generation, GDP contribution and export.The importance of MSMEs in Indian economy cannot be ignored given the fact that MSMEs contribute to 6% of GDP, 33% of total manufacturing and 45% of total export. The performance of MSME sector directly affects the economic growth of any country. The total production of goods and services produced within the country is largely affected by thecontribution of MSME sector. In major economies like United States, United Kingdom, Germany, France and Italy the contribution of MSMEs in GDP is respectively 48 percent, 50 percent, 54 percent, 59 percent and 68 percent.MSME sector is the second largest employment provider in the country after agriculture sector. The share of the MSME sector is 21% of the total employment provided by the entire sector in the economy. In major economies like United States, United Kingdom, Germany, France and Italy the contribution of MSME in employment generation isrespectively 53 percent, 52 percent, 62 percent, 63 percent, 80 percent respectively. However, with Liberalization and entry of Multi-National Corporations, Indian MSMEs are facing stiff competition. Rapid changes in technology, unpredictable market scenario and information asymmetry have also contributed to their increased problems. Some MSMEs manage to cope with such an intense competition and survive in the market. Those MSMEs who do not change their operations with the changes in the market situation, fails to survive and becomes sick.

Conclusion

MSME sector is thegrowth engine of economy. The Government of India has been continuously offering support to MSMEs through various means. But a lot needs to be done in this challenging scenario. There are a plethora of opportunities available for MSMEs and Government support is needed to harness those opportunities. The Government agencies, regulators and financial institution should come together to solve problems of MSMEs.MSMEs themselves should adopt a pro-active approach and innovate regularly. Through Innovation they would be able to differentiate their products. They also need to approach for modern methods of financing like aventure capitalist and private equity investment. MSMEs need to plan their operation carefully, minimize costs and produce quality goods at affordable price. They should continuously participate in trade exhibition and trade shows to market their product as they are thecheapest source of marketing for them. They should try to avail government schemes for their advantage. MSMEs should be nurtured with care. Not only it provides employment to a large population but also promotes entrepreneurship. The future of MSMEs is bright and MSMEs will surely play a major role in making India a developed nation.