Micro , Small & Medium

Enterprises
1. Micro enterprises are generally artisan based, located in
rural and semi- urban areas.
2. These enterprises use local skills, resources and sell their
products locally.
3. These enterprises involve lower levels of investment in
machinery and provide largely part- time employment.
4. They are spread throughout the country and include such
activities as handlooms, khadi ,sericulture,coir, bidi making,
embroidery, knitting, wood- carving and other handicrafts.
 Micro , Small & Medium
Enterprises
1. Small and medium enterprises use power driven machines
and possess some technological sophistication.
2. The market for these industries is relatively wide and
includes the export market.
3. These industries are located close to or in the urban areas
including large industrial centres.
4. Their products include hosiery goods, ready-made
garments, motor-parts, electronics,sports goods,rubber
goods and engineering goods.
 Revised Classification applicable w.e.f 1st
July 2020(MSME)
Classification Micro Small Medium

Manufacturing Investment in Plant Investment in Plant Investment in Plant

Enterprises and and Machinery or and Machinery or and Machinery or
Enterprises Equipment: Equipment: Equipment:
rendering Services Not more than Rs.1 Not more than Not more than
crore and Annual Rs.10 crore and Rs.50 crore and
Turnover ; not more Annual Turnover ; Annual Turnover ;
than Rs. 5 crore not more than Rs. not more than Rs.
50 crore 250 crore
 Micro , Small & Medium
Enterprises (MSME’s)
1. High employment potential. Small industries are generally labour
intensive and therefore promise wider employment possibilities
for the people in India.
2. Widely Dispersed Entrepreneurial Base . Small industries ensure
widest possible participation by different regions and different
classes in the industrial growth of the country.
3. Relatively Low Capital Investment required & also emphasizes on
indigenously produced machines, tools and implements.
4. Regional Balanced Development can be achieved by developing a
network of cottage and small industries as it may not be possible
to set up modern large scale industries in backward areas.
5. Export Potential. MSME’s dominate in exports of sports
goods,readymade garments,woollen garments, knitwear,plastic
products,processed food and leather products.
 LEADING MSME’s
1. Powerlooms:The decentralized powerloom sector provides employment to
48.60 lakh persons and contributes 62% to total cloth production in the
country. As of 2006,there were around 4.30 lakh powerloom units with 19.44
lakh looms.
U.S.A., France,Germany,hong kong, Italy etc. are the major markets.
2. Handlooms: West Bengal,Tamil Nadu,Uttar Pradesh,Andhra Pradesh and
Manipur are the major handloom states accounting for 75% of handloom
weaving in the country.According to the Directorate General of Handlooms,
though handlooms account for10% of our textile exports, only 1.3%of
working looms produce fabric for export markets.
 LEADING MSME’s
3. Handicrafts:The current global handicraft market is valued at more
than US $ 400 billion. China accounts for 30% of this & India’s share is
less than 2%. U.S.A. is the preferred destination for Indian handicrafts.
4. Khadi and Village Industries: (KVI) programmes have reached over
2.61 lakh villages providing employment opportunities to the rural
poor in remote and hilly areas, border and tribal areas.
5. Silk and Sericulture: At present over 60 lakh families in the states of
Karnataka, Andhra Pradesh, Tamil Nadu, West Bengal, Assam &
Jammu & Kashmir are involved in this labour intensive activity.
According to the Mysore based Central Sericulture Research &
Training Institute , against an annual requirement of about 25,000
metric tonnes only about 15,000 metric tonnes are produced in
India . The rest are imported from China, U.S.A. U.K. Italy, Germany,
Hong Kong etc.
 LEADING MSME’s
6. Wool Industry: India is the seventh largest producer of raw wool
accounting for 1.8% of the world production. As the production of fine
wool is not adequate in the country, a large quantity of wool is
imported from Australia, New Zealand, China, Middle East and other
countries.
7. Coir Industry: The coir Industry is mostly concentrated in Kerala,
Karnataka, Tamil Nadu & Andhra Pradesh.India accounts for 90% of
the world’s coir production & exports to around 90 countries in the
world.It provides livelihood to more than 31.25 lakh people & women
constitute around 80% of its workforce.
8. Food Processing Industries: India currently produces about 50
million tonnes of fruits, 9% of the world’s fruits& 90 million tonnes of
vegetables. Yet only 2% of these fruits & vegetables are processed as
against 23% in China, 78% in Philippines,83% in Malaysia & 80% in
South Africa.
 PROBLEMS OF MSME’s
1. Inadequate availability of Finance and credit: Securing bank
credits, difficulties in documentations for bank loans & lack of
collateral securities are bigger problems in India. A system of
integrated credit should be evolved to meet the long term and
short term credit requirements of Small industries at reasonable
rate of interest.
2. Inadequate and Irregular Supply of Raw Material: To compete
with large scale industries raw materials are required which may
not be available locally. It would have to be imported & thus the
small industries would have to pay a higher price for inputs.
3. Technological obsolescence: The small industries will have to
upgrade its technology and modernise, adopt modern
marketing, management practices and improve the quality of its
products and be efficient and competitive.
 PROBLEMS OF MSME’s
4. Lack of Infrastructural Facilities: Like power, transport &
communication services. This leads to fall in the
development.Thus the traditional industries are
shrinking and workers are experiencing a dip in wages.
5. Deficient Managerial and Technical Skills: Most small
industries do not have money to invest in market
research & are unable to carry out technical
improvements. Unlike big businesses they cannot invest
in advertising and packaging. This has reduced many to
the status of daily workers.
6. Imperfect knowledge of market conditions: Small
industries need better market infrastructure,
professionally organised exhibition of products at the
international level, brand promotion and
standardization.
 PROBLEMS OF MSME’s
7. Exploitation of Labour: They have little bargaining power &
are exploited by big business houses. They are unable to find
markets as they cannot take up aggressive marketing which
has resulted in a high cost structure.
8. Sickness in Small Scale Industries : Increasing NPA’s clearly
highlight financial inadequacy and irregularities among SSI
entrepreneurs.
9. Small Enterprises and globalisation : MSME’s are facing stiff
competition from imports and need technological
upgradation to produce better quality products at cheap
rates. Information technology can be used as a tool to
provide online information on indigenous products while
Central legislations & patents can be used to prevent cheap
imitations of our designs & products by other countries.
 PUBLIC SECTOR
• The Public Sector is usually comprised of organizations
that are owned and operated by the government and
exist to provide services for its citizens
• The composition of the public sector varies by country,
but in most countries the public sector includes such
services as the military, police, infrastructure (public
roads, bridges, tunnels, water supply, sewers, electrical
grids, telecommunications, etc.), public transit, public
education, along with health care
 PUBLIC SECTOR

It was the Industrial Policy Resolution 1956 & 1991 which

gave public sector a strategic role in the economy.
Objectives:
To help in the rapid economic growth & industrialization of
the country & to create the infrastructure for economic
development.
To promote balanced regional development
To promote regional redistribution of income and wealth.
To assist the development of small scale &ancillary industries.
To promote import substitution.
To create employment opportunities.
 PRIVATE SECTOR

The term private sector refers to the segment of the economy that is
not directly controlled or operated by government-run agencies and
organizations. The private sector is made up of companies that
operate to make a profit.
The private sector has been dominant in most of the consumer
goods industries.It plays an important role in a number of capital
goods industries,too. In a number of important industries it
functions side by side with the public sector.
With the New Industrial policy of 1991, the role of private sector has
been expanded. Now private enterprises are allowed in all but two
industries. The scope of private sector increased by the withdrawal
of the state from many industries and privatization.
Examples of Private Companies of India
• •Reliance Industries Limited.
• •Tata Consultancy Services (TCS)
• •Infosys Technologies Ltd.
• •Wipro Limited.
• •Bharti Tele-Ventures Limited.
• •ITC Limited.
• •Hindustan Lever Limited.
• •ICICI Bank Limited.
 JOINT SECTOR
The term joint sector refers to the enterprise owned and managed jointly by the
private sector and the government/ public sector undertakings. The Dutt
Committee has defined the joint sector as,” The joint sector includes units in
which both public and private investments have taken place and where the state
takes an active part in direction and control.
Formation of joint sector:
1. The central Government and private entrepreneurs may jointly set up new
enterprises.
2. State Governments may set up new companies jointly with private partners
involving equity participation by both partners.
3. Public Financial institutions through equity participation or conversion of
loans or debentures into equity transform enterprises promoted by private
entrepreneurs into joint sector companies.
4. The existing private enterprises may be transformed into joint sector
enterprises by the Government by converting debt into equity or by
contributing to an increase in the share capital.
5. The existing public sector companies may be transformed into joint sector
enterprises through the sale of equity shares to private entrepreneurs or the
general public.
• Madras Fertilizers Ltd. for example, was established as a joint
enterprise in participation with Amoco Inc. (USA)
• Cochin Refineries Ltd. was established with the participation of the
Phillips Petroleum Co.
(USA)
• Indian Oil PETRONAS Private Ltd.(Importing and constructing facilities
for LPG)
• IndianOil Ruchi Biofuels LLP(Ruchi Soya, Indian Oil(It is a joint venture
between Ruchi Soya Industries Ltd which is an Indore based company
and Indian Oil Corporation of India having the objective to deal with
jatropha plantation )
• Petronet LNG Limited(GAIL (India) Ltd, Bharat Petroleum Corporation
Ltd, Oil & Natural gas Corporation Ltd., Gaz de France, ADB)
 MNC’s
• Multinational Companies: As the name suggests, any company is referred to
as a multinational company or corporation (M. N. C.) when that company
manages its operation or production or service delivery from more than a
single country.
• Such a company is even known as international company or corporation. As
defined by I. L. O. or the International Labour Organization, a M. N. C. is one,
which has its operational headquarters based in one country with several
other operating branches in different other countries. The country where the
head quarter is located is called the home country whereas; the other
countries with operational branches are called the host countries.
• Top MNCs in India
• The country has got many M. N. C.s operating
here. Following are names of some of the
most famous multinational companies, who
have their headquarters of operational
branches based in India. IBM, Microsoft, Nokia
Corporation, PepsiCo, Ranbaxy Laboratories
Limited, Reebok International Limited, Sony,
Vodafone:,
 MNC’s
Following are the reasons why multinational companies consider India as a
preferred destination for business:
• Huge market potential of the country
• FDI attractiveness
• Labour competitiveness
• Macro-economic stability
Advantages of the growing MNCs to India
There are certain advantages that the underdeveloped countries like and the
developing countries like India derive from the foreign MNCs that establishes.
They are as under:
• Initiating a higher level of investment.
• Reducing the technological gap
• The natural resources are utilized in true sense.
• The foreign exchange gap is reduced
• Boosts up the basic economic structure.
 MNC’s
. Disadvantages of having MNCs in a developing country like India are as under-
• Competition to MSME
• Pollution and Environmental hazards
• Some MNCs come only for tax benefits only
• Exploitation of natural resources
• Lack of employment opportunities
• Diffusion of profits and Fore Imbalance
• Working environment and conditions
• slows down decision making
• Economic distress