MICRO SMALL AND MEDIUM ENTERPRISES (MSMEs)
The micro, small, and medium enterprises Development Act, 2006 defines MSMEs on an
investment basis for both manufacturing and service enterprises. In the case of manufacturing
enterprises, the microenterprise was defined as an enterprise where the investment in plant and
machinery did not exceed 25 Lakh; a small enterprise was defined as an enterprise where the
investment in plant and machinery was more than 25 lakhs but did not exceed 5 crores, and a
medium enterprise was defined as an enterprise where the investment in plant and machinery
was more than 5 crores but did not exceed 10 crores. In the case of service enterprises, the
microenterprises were defined as an enterprise where the investment in plant and machinery
did not exceed 10 lakhs; a small enterprise was defined as an enterprise where the investment
in plant and machinery was more than 10 lakhs but did not exceed 2 crores, and a medium
enterprise was defined as an enterprise where the investment in plant and machinery was more
than 2 crores but did not exceed 5 crores.
PERFORMANCE OF MSMEs IN THE INDIAN ECONOMY
Contribution to GDP
The micro, small, and medium enterprises (MSME) sector has emerged as a highly vibrant and
dynamic sector of the Indian economy over the last five decades. There are 633.88 lakh
MSMEs in India. On the basis of the nature of the activity, MSMEs are categorized as
manufacturing, trade, other services, and electricity. MSMEs are widening their domain across
sectors of the economy, producing a diverse range of products and services to meet the demands
of domestic as well as global markets. The MSME sector accounts for 29% of total GDP and
45% of the industrial output of the country.
Employment generation
The importance of MSMEs can be established from the fact that the labor intensity in micro
and small enterprises is four times higher than that of large enterprises. MSME sector has
The micro, small, and medium enterprises Development Act, 2006 defines MSMEs on an
investment basis for both manufacturing and service enterprises. In the case of manufacturing
enterprises, the microenterprise was defined as an enterprise where the investment in plant and
machinery did not exceed 25 Lakh; a small enterprise was defined as an enterprise where the
investment in plant and machinery was more than 25 lakhs but did not exceed 5 crores, and a
medium enterprise was defined as an enterprise where the investment in plant and machinery
was more than 5 crores but did not exceed 10 crores. In the case of service enterprises, the
microenterprises were defined as an enterprise where the investment in plant and machinery
did not exceed 10 lakhs; a small enterprise was defined as an enterprise where the investment
in plant and machinery was more than 10 lakhs but did not exceed 2 crores, and a medium
enterprise was defined as an enterprise where the investment in plant and machinery was more
than 2 crores but did not exceed 5 crores.
PERFORMANCE OF MSMEs IN THE INDIAN ECONOMY
Contribution to GDP
The micro, small, and medium enterprises (MSME) sector has emerged as a highly vibrant and
dynamic sector of the Indian economy over the last five decades. There are 633.88 lakh
MSMEs in India. On the basis of the nature of the activity, MSMEs are categorized as
manufacturing, trade, other services, and electricity. MSMEs are widening their domain across
sectors of the economy, producing a diverse range of products and services to meet the demands
of domestic as well as global markets. The MSME sector accounts for 29% of total GDP and
45% of the industrial output of the country.
Employment generation
The importance of MSMEs can be established from the fact that the labor intensity in micro
and small enterprises is four times higher than that of large enterprises. MSME sector has
