What is SME?

SME stands for small and medium enterprises. The SME definition in India encompasses both
manufacturing and service enterprises. Small and medium enterprises are categorised based on
the composite criteria of annual turnover and investment in plant and machinery or equipment.

Small and Medium Enterprises are defined in accordance with Section 7 of the Micro, Small and
Medium Enterprises Development Act, 2006.
They are classified as such on the basis of the size of investment in these sectors. The threshold
for investment in Small Enterprises sector ranges between 1 crore and 10 crores while the
threshold of turnover ranges between INR 5 crore and INR 50 crores. In case of Medium
Enterprises, the threshold of investment ranges between INR 10 crores and INR 50 crores while
the threshold of turnover ranges between INR 50 crores and INR 100 crores. These industries
form a significant component of the Secondary, Tertiary, and Quaternary Sectors of the economy
and are therefore found in both Manufacturing and Service sectors.
Further, there are no restrictions imposed on the type and nature of such enterprises. Thus one
can find various kinds of SMEs such as proprietorship, companies, cooperatives, Hindu
Undivided Family, partnerships, and so on.

Government Assistance
The Indian government has been supporting and developing small unit sectors. India is focusing
on rural industries and cottage industries. According to layman’s language, a small business is a
project or venture that requires a small budget or is run by small group of people.
Both central and state government have been emphasizing more on self-employment
opportunities in rural sectors by providing help and support in financing in terms of loans,
training in terms of programs, infrastructure, raw materials and technology.
The core purpose of the government is to utilise the local manpower and locally available
resources. Which are further transformed into action by local departments, agencies,
corporations, etc. The support of small industries include:

Institutional Support
1. National Bank for Agriculture and Rural Development (NABARD)
NABARD established by the government in 1982 to give action and to promote the rural
industries. It has adopted multi-purpose strategies in promoting in rural business in India. It
supports small industries, rural artisans, rural industries, cottage industries along
with agriculture. Also, it sets up training and counselling plus it gives development programmes
for rural entrepreneurs.

2. A Rural Small Business Development Centre (RSBDC)

RSBDC is a government centre sponsored by NABARD for micro, small and medium businesses
which is set up by world organization. The primary purpose of RSBDC is to work for socially
and financially disadvantaged people and groups. RSBDC does many programmes on skill up
gradation, entrepreneurship, awareness, counselling and training.
These programmes motivate various unemployed youth and young women learn different trades
and introduce them to other good benefits from it.
3. National Small Industries Corporation (NSIC)
NSIC was set up in 1995 by the government to popularize and support small businesses focusing
on commercial aspects. The important functions of NSIC are:
 Supply imported goods and machine on hire purchase agreement.
 Procurement of supply imported indigenous raw materials.
 Developing small business by importing their products. Supervising services.
 Awareness on technical up gradation.
Also, a new scheme called performance and credit rating for small units have been started by
NSIC, this ensures that the more their credit rating, the more their financial assistance for their
investment and capital requirement.

4. Small Industries Development Bank of India (SIDBI)

It is a top government bank to provide direct and indirect financial support under various
schemes to meet credit requirements of various small businesses.

5. The National Commission for Enterprises in the Unorganised Sector (NCEUS)

NCEUS was formed in the September 2004 by the government with objectives:
 Measures to improve the productivity of small industries in the informal sector.
 Generation of employment in the rural sector.
 Creating links between small sector and finance, infrastructure, raw materials and
technology.
 To create public and private partnerships for engagement in imparting skills for the
informal sector.
 Providing micro-finance for the informal sector.
 Providing social security for the informal sector.
 To introduce competition of small scale in a global environment.

6. Rural and Women Entrepreneurship Development (RWED)

This is a government organisation that focuses to raise the business environment for women and
to support women’s business initiatives. It provides manual for training in entrepreneurship and
renders advisory services.

7. World Association for Small and Medium Enterprises (WASME)

WASME is an international body that is nongovernmental organisation of micro, small and
medium business units in India which establish an international committee and focus on rural
development and apply action plan model for sustained growth of rural industries.

8. Scheme of Funds for Re-generation of Traditional Industries

From 2005, the government established a fund to support these traditional small industries and to
facilitate higher productivity and to enhance their growth and development.
What is MSME?
MSME stands for Micro, Small, and Medium Enterprise that was introduced by the Government
of India in agreement with the Micro, Small & Medium Enterprises Development (MSMED)
Act, 2006. MSME is initiated and managed under the Ministry of MSME (MoMSME) are
entities engaged in the production, manufacturing, processing or preservation of goods and
commodities.
MSME sector is considered the backbone of the Indian economy that has contributed
substantially to the socio-economic development of the nation. It generates employment
opportunities and works in the development of backward and rural areas. As per the official data
as of 31st Aug 2021, there are presently approximately 6.3 crore MSMEs in India.

Importance of MSMEs for Indian Economy

 Employment: It is the second largest employment generating sector after agriculture. It
provides employment to around 120 million persons in India.
 Contribution to GDP: With around 36.1 million units throughout the geographical
expanse of the country, MSMEs contribute around 6.11% of the manufacturing GDP and
24.63% of the GDP from service activities.
o MSME ministry has set a target to up its contribution to GDP to 50% by 2025 as
India becomes a $5 trillion economy.
 Exports: It contributes around 45% of the overall exports from India.
 Inclusive growth: MSMEs promote inclusive growth by providing employment
opportunities in rural areas especially to people belonging to weaker sections of the
society.

o For example: Khadi and Village industries require low per capita investment and
employs a large number of women in rural areas.
 Financial inclusion: Small industries and retail businesses in tier-II and tier-III cities
create opportunities for people to use banking services and products.
 Promote innovation: It provides opportunity for budding entrepreneurs to build creative
products boosting business competition and fuels growth.
Thus, Indian MSME sector is the backbone of the national economic structure and acts as a
bulwark for Indian economy, providing resilience to ward off global economic shocks and
adversities.
The Twelfth Plan has listed the following as the objectives for the MSME sector
 Promoting competitiveness and productivity in the MSME space.
 Making the MSME sector innovative, improving technology and depth.
 Enabling environment for the promotion and development of MSMEs.
 Strong presence in exports.
 Improved managerial processes in MSMEs.

New MSME Classification

The distinction between the manufacturing and services enterprises has been removed by making
the investment amount and annual turnover similar for enterprises engaged in both sectors.
What is Small Industries Development Bank of India (SIDBI)?
Small Industries Development Bank of India (SIDBI) is an independent financial institution
aimed at aiding the growth and development of Micro, Small and Medium Enterprises (MSMEs)
which contribute significantly to the national economy in terms of production, employment and
exports.
 SIDBI was established with the mission of facilitating and strengthening the flow of
credit to Micro, Small and Medium Enterprises and for addressing the developmental and
financial gaps in the ecosystem of MSMEs.
 It is a statutory body set up under an act of the Indian Parliament in 1990.

Functions of SIDBI
 It aims at emerging as a single-window to meet the developmental and financial needs of
MSMEs in order to make them globally competitive, strong, vibrant and to protect the
institution as a customer-friendly financial body.
 It also aims at enhancing the wealth of shareholders through the modern technology
platform.
 It is involved in the promotion and development of the MSME sector.
 It is the principal institution for the development, promotion and financing of the MSME
sector and for coordination of functions of the institutions engaged in similar activities.
 SIDBI retained its position in the top 30 Development Banks of the World in the ranking
of The Banker, London.
 SIDBI also functions as a Nodal/Implementing Agency to various ministries of the
Government of India viz., Ministry of MSME, Ministry of Textiles, Ministry of
Commerce and Industry, Ministry of Food Processing and Industry, etc.

Financial Support of SIDBI to MSMEs

SIDBI provides financial support to MSMEs in the following ways:
1. Indirect financing by way of refinancing the banks, refinancing financial institutions for
onward lending to MSMEs.
2. Direct financing by way of service sector financing, receivable financing, risk capital and
sustainable financing, etc.

Khadi and Village Industries Commission (KVIC)

Khadi and Village Industries Commission (KVIC) is a statutory body of the Indian Constitution.
It comes under the Ministry of Micro, Small and Medium Enterprises. It was established by
Khadi and Village Industries Act, 1956. It has been amended twice, in 1965 and 2006. It is one
among the important constitutional, statutory and quasi-judicial bodies of India.
Objectives of KVIC
The broad objectives of the Khadi Village and Industries Commission encompassing self-
reliance and sustainability are:
1. To boost employment in the country.
2. To promote the promotion and sale of Khadi articles
3. To cater to the self-reliance doctrine of the country by empowering underprivileged and
rural sections of the society.

Functions of KVIC
The following are the functions of Khadi Village and Industries Commission:
1. It plans, promotes, organizes, and implements programmes for the development of Khadi
and Village Industries (KVI).
2. It coordinates with multiple agencies that are engaged in rural development for several
initiatives w.r.t khadi and village industries in rural areas.
3. It maintains a reserve of raw materials that can be further promoted in the supply-chain.
4. It aids in creating common service facilities that help in processing of raw materials.
5. It aids the marketing of KVI products through artisans and other avenues.
6. It creates linkages with multiple marketing agencies for the promotion and sale of KVI
products.
7. It encourages and promotes research and development in the KVI sector.
8. It brings solutions to the problems associated with the KVI products by promoting
research study and enhancing competitive capacity.
9. It also helps in providing financial assistance to the individuals and institutions related to
the khadi and village industries.
10. It enforces guidelines to comply with the product standards to eliminate the production of
ingenuine products.
11. It is empowered to bring projects, programmes, schemes in relation to khadi and village
industries’ development.

National Institute of Entrepreneurship and Small Business Development (NIESBUD)

The National Institute for Entrepreneurship and Small Business Development is a premier
organization of the Ministry of Skill Development and Entrepreneurship, engaged in training,
consultancy, research, etc. in order to promote entrepreneurship and Skill Development. The
major activities of the Institute include Training of Trainers, Management Development
Programmes, Entrepreneurship-cum-Skill Development Programmes, Entrepreneurship
Development Programmes and Cluster Intervention. The Institute has been actively delivering
International Trainings for the ITEC nation participants under the aegis of Ministry of External
Affairs. The institute has been financially self-sufficient since 2007-08.

Major Activities
The major activities of the Institute inter alia include:
 Training: The training programmes being organized by the Institute inter-alia include
Trainers’ Training Programmes (TTPs); Management Development Programmes
(MDPs); Orientation Programmes for Head of Departments (HoDs) and Senior
 Executives; Entrepreneurship Development Programmes (EDPs); Entrepreneurship-cum-
Skill Development Programmes (ESDPs) and specially designed sponsored activities for
different target groups.

 Research/Evaluation Studies: Besides the primary/basic research, the Institute has been
undertaking review/evaluation of different government schemes/programmes, training
need assessment- Skill Gap studies, industrial potential survey etc. The broad objective of
these activities is the promotion of the Entrepreneurship across the country.

 Development of Course Curriculum/Syllabi: The Institute has developed Model

Syllabi for organizing Entrepreneurship Development Programmes. It also assists in
Standardization of Common Training programmes.

 Publications and Training Aids: The Institute has been bringing out different
Publications on entrepreneurship and allied subjects. The Institute brings out a quarterly
Newsletter showcasing the activities, achievements and interventions under the
Entrepreneurial landscape of the country.

 Cluster Interventions: The Institute has been actively involved in undertaking

developmental programmes (Soft and Hard Interventions) in Clusters in different
capacities. The Institute has so far handled a total of 24 Industrial Clusters.

 Online and Electronic Learning Modules:The Institute has developed an E-learning

Module (Hindi and English) for Entrepreneurship Development Programmes. The
Module was launched in different States. In addition, a snapshot ofonline learning
Modules offered by the institute include modules on Cyber Security, Communication
Skills, Java, Personality Development, Mathematical Modeling, Web Designing & Cloud
Computing. Retail and Entrepreneurship, Employability and Life Skills.

 The Regional Office, Dehradun: Undertakes Research and provides Training &
Consultancy Services to the beneficiaries specially those belonging to the states of
Uttarakhand and Uttar Pradesh.

 Hand-holding for Enterprise Creation and Employment Assistance to the

Trainees: The Institute provides hand-holding services to candidates interested in self-
employment and assists to find suitable wage employment if they do not opt for self-
employment. For the same, an interaction platform called Rozgar Mela(s) is organized for
prospective employees and trained persons.

 International Activities: The Institute conducts 8-weeks’ training programmes under the
Fellowships of the Ministry of External Affairs: ITEC/SCAAP/COLOMBO Plan for the
participants from different countries. Besides, the Institute also designs and conducts
special /request training programmes for overseas agencies and has also been assisting
 other countries through consultancy assignments primarily in assessing the industrial
potential of different Regions.The programme is being infused with technology for it to
have viability in a post-pandemic situation.

 Consultancy Services (National and International): Offering consultancy services in

the area of entrepreneurship especially for MSMEs. It Offers advice and consultancy to
other Institutions engaged in entrepreneurial training either in the Government or in the
Private Sector. Advising Governments (both Central & State) and foreign Governments
as well in the area of entrepreneurship and MSMEs.

IDBI
IDBI is the Industrial Development Bank of India, set up in the year 1964. Its headquarters are in
Mumbai and its parent company is Life Insurance Corporation (LIC).
The purpose of setting up the IDBI is to financial and other credit facilities to struggling
industries. Moreover, the IDBI came into existence with the aim to provide financial support
credit assistance to needy industries.
Initially, the IDBI continued to operate as an RBI subsidiary. But over time, the RBI it
underwent a transfer and now functions under the Government of India (GOI).

History of IDBI
 IDBI group was founded in 1964 as a wholly-owned subsidiary of RBI under the
Parliament Act.
 Since 1992, IDBI has offered Indirect Financial Assistance via the State Level Financial
Foundation and Loan Refinancing to enhance the financial sector of the government.

Objective of IDBI
 The main objectives of IDBI are the establishment of a significant long-term financing
institution.
 The collaboration with institutions operating in the banking sector for the expected
growth of the industrial sector. The provision of administrative & technical support to the
industries and the conduct of research & development ( R&D) for the benefit of the
Industrial Segment of India.
 IDBI has 1602 branches, 2912 ATMs, and 1013 centres, including 2 Overseas Centers in
Singapore and Beijing. Its dream is to be a widely preferred and trusted bank to enhance
stakeholder value. Mr Mahesh Kumar Jain is CEO and MD of IDBI as of 9 October
2017.

IDBI Products
There are various products offered by IDBI, and few are listed below.
 Saving accounts
 Debit and credit cards
 Lockers and FD
 Loans
 Agricultural loans, etc.
NSIC
National Small Industries Corporation (NSIC) was established in the year 1955 in order to
promote, aid and foster the growth of small business units in the country.
NSIC (National Small Industries Corporation) is a government corporation that works under the
MOMSME, supporting the Micro, Small and Medium Enterprises growth. It also actively
encourages businesses to sustain in the present market through loans and other schemes.
This corporation operates throughout the nation via accessible technical centres and offices.
Apart from India, the NSIC operates in a few African countries. Hence, it set up an
administration centre in Johannesburg, South Africa, to manage, support, and operate MSME
functionalities.

Objectives of NSIC.
 To build corporation reach and support in the sustainable growth of Micro, Small, and
Medium Enterprises.
 To support and enhance the workforce in the industries by upgrading skills.
 To ensure a hygienic working environment.
 To train people and create self-employment that develops the nation.
 To improve businesses’ efficiency, profits, and productivity.
 To facilitate the MSMEs with lease equipment, huge machinery, and raw materials.

The functions of NSIC are as follows:

1. To create awareness about technological upgradation.
2. To develop technology transfer centres and software technology parks.
3. To export the products of small business units in order to develop export worthiness.
4. To obtain, supply and distribute indigenous and imported raw materials.
5. To provide mentoring and advisory services.
6. To serve as technology business incubators.
NSIC has also introduced a new scheme of performance and credit rating for small businesses in
order to encourage them to maintain good financial track record and to sensitize them about the
need for credit rating.

AWAKE –
The Association of Women Entrepreneurs of Karnataka was founded in December 1983 and is
one of India’s premier institutions for women entrepreneurs totally devoted to the development
of entrepreneurship among women. AWAKE, an ISO 9001-2015 organization, is a not-for
profit-NGO.
AWAKE's membership is made up of more than 3500 women entrepreneurs, who volunteer their
time to contribute to the functioning of the organization and furthering AWAKE’s mission of
promoting entrepreneurship amongst women. AWAKE members themselves facilitate and guide
women who want to start or grow their businesses – this entrepreneur-teaching-entrepreneur
through a timetested module of Counselling-Training-Experience sharing-Peer group support has
led to more than 10000 women starting micro, small and medium enterprises.
AWAKE – Association of Women Entrepreneurs of Karnataka is a not-for-profit, Non-
Governmental Organization (NGO) based in Bangalore, India, working towards ‘Empowerment
of women through entrepreneurship development to improve their economic condition’.
AWAKE strives to promote entrepreneurship among women as a means to achieve self reliance
and socio-economic independence.
AWAKE provides support and guidance to aspiring women from rural, urban, national and
international arenas to be successful entrepreneurs, irrespective of their age, academic, social,
economic background.
AWAKE’s services are extended to women Self Help Groups (SHGs), NGOs and other
development agencies engaged in Income Generation Activities and Entrepreneurship
Development.
AWAKE’s process in entrepreneurship development involves awareness programs, business
counseling, trainings, skill development, mentoring, business incubation, information sharing
and networking, marketing assistance, credit referral and policy advocacy.
The organization comprises of women entrepreneurs from various sectors as its members.
Members of AWAKE contribute their time and expertise to support women entrepreneurs, based
on the approach ‘Entrepreneur guiding Entrepreneur’.
AWAKE has a strong support network with Government, non-government, corporate,
developmental agencies, funding and finance agencies, working with them to provide the
expertise in entrepreneurship development for both rural and urban women.
AWAKE collaborates as a resource organization in institutional competence building, training,
policy making and enabling technology transfers for state, national and international agencies.
AWAKE fosters an entrepreneurial culture in women such that their contribution to the global
economy is recognized.