What is MSME with Detailed Explanation and Examples.
MSME stands for Micro, Small and Medium Enterprises These are businesses or companies that are considered to be a crucial part of the Indian economy. MSMEs are defined by the investment in plant and machinery, as follows:
- Micro enterprises: These are businesses with an investment in plant and machinery of up to Rs. 25 lakh. Examples of micro enterprises include small retail shops, street vendors, and small-scale manufacturers.
- Small enterprises: These are businesses with an investment in plant and machinery between Rs. 25 lakh and Rs. 5 crore. Examples of small enterprises include small-scale service providers such as repair shops, small-scale manufacturing units, and small-scale trading businesses.
- Medium enterprises: These are businesses with an investment in plant and machinery between Rs. 5 crore and Rs. 10 crore. Examples of medium enterprises include medium-scale manufacturing units, medium-scale service providers, and medium-scale trading businesses.
MSMEs are considered to be the backbone of the Indian economy as they create employment opportunities and contribute significantly to the country’s GDP. According to a report by the Ministry of Micro, Small and Medium Enterprises, MSMEs in India employ around 1.2 Crore people, which is around 45% of the country’s total workforce. They also contribute around 30% to the country’s GDP and around 50% to the country’s exports.
The government of India provides various schemes and incentives for the growth and development of MSMEs. Some of the key schemes include:
- Credit Guarantee Fund Scheme: This scheme provides collateral-free credit to MSMEs, which helps them to access credit at more favorable terms.
- Prime Minister’s Employment Generation Programme: This scheme provides financial assistance to MSMEs for setting up new units, as well as for upgrading existing units.
- Technology Upgradation Fund Scheme: This scheme provides financial assistance to MSMEs for upgrading their technology and machinery, which helps them to improve their competitiveness.
- National Small Industries Corporation (NSIC) Schemes: These schemes provide various services to MSMEs, such as marketing support, technological support, and financial support.
- National SC-ST Hub: This scheme provides support to MSMEs owned by Scheduled Castes and Scheduled Tribes, which helps them to improve their competitiveness and access new markets.
The government also provides various tax benefits to MSMEs. For example, MSMEs with a turnover of up to Rs. 2 crore are eligible for a lower rate of corporate tax (25%) as compared to larger companies (30%). MSMEs are also eligible for various exemptions and deductions under the Income Tax Act.
In addition to government schemes, MSMEs can also access various private sector initiatives that are designed to support their growth and development. For example, many banks and financial institutions offer special schemes and products for MSMEs, such as low-cost loans and working capital facilities.
It is clear that MSMEs play a vital role in the Indian economy, both in terms of employment and economic growth. The government of India recognizes this and has put in place a range of schemes and incentives to support their growth and development.
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