(Submitted for the Degree of B.Com.

Honours in Accounting & Finance

under the University of Calcutta)

TITLE OF THE PROJECT

ROLE OF MSMEs IN THE INDIAN ECONOMIC DEVELOPMENT

SUBMITTED BY

Name: MADHUSMITA NATH

CU Registration No.: 047-1211-0413-22

CU Roll No.: 221047-11-0130

Name of the College: SIVANATH SASTRI COLLEGE

College Roll No.: 220808

SUPERVISED BY

Name of the supervisor: RAJYASRI CHAKRABARTY

Name of the College: SIVANATH SASTRI COLLEGE

MONTH & YEAR OF SUBMISSION

Month: JUNE

Year: 2025

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Annexure-IA

SUPERVISOR’S CERTIFICATE

This is to certify that Ms MADHUSMITA NATH, a student of 6th Semester

B.Com. Honours in Accounting & Finance of SIVANATH SASTRI
COLLEGE under the University of Calcutta has worked under my supervision
and guidance for her Project Work and prepared a Project Report with the title
“ROLE OF MSMEs IN THE INDIAN ECONOMIC DEVELOPMENT”
which she is submitting, is her genuine and original work to the best of my
knowledge.

Place: Signature:

Date: Name: Rajyasri Chakrabarty

Designation:

Name of the College:

Sivanath Sastri College

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Annexure-IB

STUDENT’S DECLARATION

I, Madhusmita Nath, hereby declare that the Project Work with the title “ROLE
OF MSMEs IN THE INDIAN ECONOMIC DEVELOPMENT” submitted
by me for the partial fulfilment of my degree of B.Com Honours in Accounting
& Finance under the University of Calcutta is my original work and has not
been submitted earlier to any other University/Institution for the fulfilment of
the requirement for any course of study.

I also declare that no chapter of this manuscript in whole or in part has been
incorporated in this report from any earlier work done by others or by me.
However, extracts of any literature which has been used for this report has been
duly acknowledged providing details of such literature in the references.

Place: Kolkata Signature:

Date: Name: Madhusmita Nath

Address: Akra Krishnanagar,

P.O – Krishnanagar,

South 24 Paraganas, Kolkata-140

C.U. Registration No.:

047-1211-0413-22

C.U. Roll No.: 221047-11-0130

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 ACKNOWLEDGEMENT
This project has been a great challenge for me. To examine & work on the field
I have studied & analysed a lot. I have spent a lot of time & effort on this
project which after completing gave me pleasure & relief at the end. It was a
wonderful experience to explore and work in areas I have not worked before &
even my academics could not cover such researching areas. It is a project that
can help you enhance your findings & researching abilities.

First of all, I would like to thank my supervisor, mam “Rajyasri Chakrabarty”

who has helped me in every step of this project and guided me a lot to complete
this project. Literally, it was difficult for me to complete this project without her
help. I am very much grateful to her as she helped me in choosing this topic and
gave me the right instructions to prepare the project. I would also like to thank
our university for giving me this opportunity to work on this project. I got to
learn a lot from this project about the role of MSMEs towards employment
generation in our country, how it contributed to exports, national income, what
are its benefits and limitations, what challenges does it faced, its impact on the
growth of other sectors in the economy & finally its role in the economic
development of India.

At last, I would like to thank my college “Sivanath Sastri College” for giving
me time & all the facilities required for the project. I would like to extend my
heartfelt thanks to my parents for encouraging me during this period and
providing me the requirements of this project.

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 SYNOPSIS
MSMEs play a vital role in India‟s economic development, contributing
significantly to GDP, employment and exports. This project aims to explore the
role of MSMEs in Indian economic development, highlighting their
contributions, challenges and growth opportunities. The main purposes of this
project are:

o To analyse the contributions of MSMEs to India‟s economy, including

GDP, employment and exports.
o To identify the challenges faced by MSMEs, including access to finance,
infrastructure and regulatory framework.
o To explore the role of MSMEs in promoting inclusive growth
o To discuss government initiatives and policies supporting MSME
development.

The type of data used in this project is secondary data gathered from
government reports, research papers and industry publications to analyse the
role of MSMEs in Indian economic development. The findings provided will
contribute a better understanding of the MSME sector and inform policy
decisions to support their growth and development.

The project aims to highlight the crucial role MSMEs play in India‟s economic
development and provide actionable insights for policymakers, stakeholders and
MSME owners. By addressing the challenges and leveraging growth
opportunities, MSMEs can become a stronger pillar of India‟s economy.

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 INDEX
CHAPTERS CONTENTS PAGE NO.
1. INTRODUTION 7-14
1.1 Background of the Study 7-9
1.2 Significance of the Study 9
1.3 Brief Review of Literature 9-12
1.4 Objectives of the Study 12
1.5 Research Methodology 12-13
1.6 Limitations of the Study 13
1.7 Chapter Planning 13-14

2 CONCEPTUAL FRAMEWORK 15-30

2.1 Concept 15-17
2.2 Essential Features or Characteristics 18
of MSMEs
2.3 Objectives of MSMEs 19
2.4 Benefits of MSMEs in India 19-20
2.5 Disadvantages of MSMEs in India 20
2.6 Role & Importance of MSMEs in the 21-22
Economic Development of India
2.7 Major Challenges Faced by MSMEs 22-23
2.8 Registration of MSMEs 23-25
2.9 Government Schemes Available to 25-26
MSMEs
2.10 National & International Scenario 26-28
2.11 List of MSME Companies in India 28-30

3 PRESENTATION OF DATA, 31-39

ANALYSIS & FINDINGS
3.1 Data Analysis & Presentation of Data 31-38
3.2 Findings 38-39

4 CONCLUSION & 40-41

RECOMMENDATION
4.1 Conclusion 40
4.2 Recommendation 41

BIBLIOGRAPHY 42

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 CHAPTER 1

INTRODUCTION

1.1 BACKGROUNG OF THE STUDY

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. It contributes significantly in the economy and social development of
the country by fostering entrepreneurship and generating large employment
opportunities at comparatively lower capital
cost, next only to agriculture. MSME are
complementary to large industries as ancillary
units and this sector contributes significantly
in the inclusive industrial development of the
country. The MSME are expanding their
domain across sectors of the economy, producing diverse range of products and
services to meet demands of domestic as well as global markets.

The Micro, Small and Medium Enterprises Development (MSMED) Act was
notified in 2006 to address different issues affecting MSME, inter alia, the
coverage and investment ceiling of the sector. The MSMED Act seeks to
facilitate the development of these enterprises as also enhance their
competitiveness. The MSMED Act has the following key provisions:

 Establishment of a National Board for Micro, Small and Medium Enterprises

headed by the Hon'ble Union Minister for MSME. The role of the Board is
to examine the factors affecting the promotion and development of MSME,
review the policies and programmes of the Central Government and make

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 recommendations in regard to facilitating the promotion and development
and enhancing their competitiveness.

 It provides the legal framework for recognition of the concept of “enterprise”

which comprises both manufacturing and service entities.

 It empowers the Central Government to undertake programmes and issue

guidelines and instructions to develop and enhance the competitiveness of
MSME.

On 9 May 2007, the erstwhile Ministry of Small Scale Industries and the
Ministry of Agro and Rural Industries were merged to form the Ministry of
Micro, Small and Medium Enterprises (M/o MSME). The Ministry designs
policies, promotes and facilitates programmes, projects, schemes and monitors
their implementation, with a view to assist MSME and helping them to scale
up. The M/o MSME runs various schemes aimed at financial assistance,
technology assistance and upgradation, infrastructure development, skill
development and training, enhancing competitiveness and market assistance of
MSME.

The Ministry of Micro, Small & Medium Enterprises (M/o MSME) envisions a
progressive MSME sector by promoting growth and development of the Sector,
including Khadi, Village and Coir Industries, in cooperation with
Ministries/Departments, State Governments and other stakeholders, by
providing support to existing enterprises, adopting cutting edge technologies
and encouraging creation of new enterprises.

The following project seeks to measure the performance of MSME in various

fields of our country over last 5 years. The paper is structured as follows: It
provides brief literature review, objectives and significance of the study,

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methodology used & limitations, followed by a brief description of MSME.
Subsequently, it presents & analyses the data, discusses the results, & finally
offers the conclusions with recommendations.

1.2 SIGNIFICANCE OF THE STUDY

The need/significance of the study is given below:

i. The study gives a clear concept about the performance of MSME.

ii. It explores the no. of units of MSME established and its contribution
in each sector from the data analysed.
iii. It helps to know the major factors & challenges faced by MSMEs.
iv. It provides an analysis with the help of secondary data on MSMEs‟
role and contribution to employment, exports, and promoting
inclusive growth.

1.3 BRIEF REVIEW OF LITERATURE

Here are some of the reviews on the role of MSMEs in Indian economic
development given by different scholars & journalists:

a) D Chitsimran, A Pandey, P Mehak

Solid State Technology 63 (6), 18164-18203, 2020
Micro, small and medium, enterprises have been an area of great interest
for many researches. As per their report, credit is a crucial input for
promoting growth of the MSME Sector. Their study aims to find out the
role of MSMEs in development, major hindrances to MSME growth and
what influences such hindrance. They have further found financial
constraints as a major hindrance to MSME growth. According to them,
“MSMEs find it difficult to obtain credit from formal sector, and banks
find it difficult to give credit to the sector. However, formal lending

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 sources are indispensable to MSME development. Reliance on informal
sector is not a healthy option for the small sector.”

b) Richa Shelly, Tanuj Sharma, Simarjeet Singh Bawa

International Journal of Economics and Financial Issues 10 (5), 84,
2020
“The Micro, Small and Medium Enterprises (MSME) are crucial for the
economic development of any country and play a pivotal role specifically
for developing countries as they regulate economic activity and generate
employment thus significantly contribute in poverty reduction. After
agriculture, this sector is the second largest employer in India. Indian
MSME sector has emerged as dynamic and highly vibrant sector of the
economy. MSME, not only play significant role in generating large
employment by investing less capital as compared to large industries but
also help develop nonfarm sector by increasing industrialization in rural
areas. The sector acts as the instrument of inclusive growth empowering
the most vulnerable and marginalized groups.”

c) Dipak Kumar Das

International Journal of Multidisciplinary Research and Explorer
1 (9), 1-7, 2020

“Micro, Small and Medium Enterprises (MSMEs) contributing around

30% of the Indian gross domestic product (GDP), around 45% of the
manufacturing output, and approximately 40% of the country‟s exports. It
won‟t be wrong to refer to them as the „Backbone of the Indian
economy.‟”

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d) Ms Akansha Rawat, Ananda Karmakar
Ilkogretim Online 20 (2), 2709-2721, 2021
“The Agenda for Sustainable Development 2030, which includes the
Sustainable Development Goals (SDGs) & goals, represents Member
States‟ collective pledge to free humanity from poverty, ill health, and
unsustainability. In terms of economic growth, job creation, and poverty
elevation, reduction in inequality, Micro, Small, and Medium Enterprises
are widely recognised as key contributors to preserving sustainable
development. MSMEs, often known as “growth engines”, are critical for
developing nations‟ economies, such as India‟s, since they have the
ability to create a large number of jobs. This sector has generated
policymakers‟ interest since it is labour-intensive and has the ability to
alleviate regional disparity, guarantee financial autonomy for rural
people, and aid in longterm development.”

e) Fakhruddin Ahmad, Manas Ranjan Patra

Entrepreneurship In India-Issues and Challenges 1 (1), 108, 2023
“MSME is the backbone of rural India. Support for protection,
management of MSME had been reflected since the inception of
Industrial policy of India in 1948. After independence it got due
recognition and apex body named small industries development
organizations (SIDO) was set up for its growth. In every FYP government
assigned increasing importance and support for its DEVELOPMENT
AND PROMOTION. 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. It
contributes significantly in the economic and social development of the
country by fostering entrepreneurship and generating large employment

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 opportunities at comparatively lower capital cost, next only to
agriculture.”

1.4 OBJECTIVES OF THE STUDY

The chief objectives of the study are:

To get better understanding of the concept of MSME.

To examine the contribution of MSMEs to India‟s GDP.
To assess the employment generation potential of MSMEs.
To evaluate the growth & sector-wise distribution of MSME in India.
To evaluate the export performance of MSME sectors.
To identify the challenges faced by MSMEs.
To analyse the impact of government initiatives on MSMEs.
To explore the role of MSMEs in promoting inclusive growth.

1.5 RESEARCH METHODOLOGY

Research methodology is the way to systematically solve the research
problem. It is important for research to know not only about the research
method but also the methodology. Methodology is the process by which
researchers describe, explain and predict phenomenon relating to their
research.
 Area of the Study: In this project, I have selected the overall MSME
sector of India to explain its role in the Indian economic development.
 Source of Data: This project is based on Secondary data acquired
from various websites and books. The study also covers information
collected from ChatGPT.
 Period of Study: This project is based on information of Annual
Report of MSME for a period of 5 years from 2018-19 to 2023-24.

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  Formation of project: This project is formed using software namely,
Microsoft Word & Microsoft Excel for the preparation of tables and
charts. The secondary data given is analysed into different tables &
their respective charts.

1.6 LIMITATIONS OF THE STUDY

The problems/limitations of the study are:
 The study is based on secondary data. No primary data for the
study is provided.
 Only two data based on year wise is available. The rest of the data
presented is for the year 2023-24.
 The study is done analysing the data of past 5 years from 2018-19
to 2022-23. The data of current year (2024-25) is not available
which makes the analysis a bit back handed.
 As the report is based only on 5 years data and data of 2023-24, the
past year reports do not have any effect on this project. Hence a full
outlook on this topic might not be derived.

1.7 CHAPTER PLANNING

The project constitutes the following chapters:
 Chapter 1: It deals with the topic‟s introduction, its history and
background. It contains brief literature review of similar analysis
done on this topic. It also contains the significance and objectives of
the study, the procedure of research and finally, the limitations of the
project.

 Chapter 2: It provides the conceptual framework of the topic. A brief

explanation on the concept of topic is given. Here the different areas

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 of the topic are covered such as features, objectives, advantages,
disadvantages, importance, national & international scenario and so
on.

 Chapter 3: This chapter focuses on the presentation of data and its

analysis. It presents the secondary data related to the topic and
analysis it and interprets the result. Even it contains the required
tables and graphs to explain the data. It also tells us about the
findings.

 Chapter 4: It provides conclusion of the project. It closes the project

with a result. It deals with conclusion based on the data analysed. It
also gives recommendations based on the topic.

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 CHAPTER 2

CONCEPTUAL FRAMEWORK

2.1 CONCEPT

Micro, Small and Medium Enterprises (MSME) is a general classification

within the Indian Business and Trade Sector defined in terms at their investment
made towards equipment etc. The Government of India has enacted the micro,
small and medium enterprise development (MSMED) Act 2006 in terms of
which the definition of micro, small and medium enterprises is as under.

Enterprises engaged in the manufacturing or production, processing or

preservation of goods as specified below:

A micro enterprise is an enterprise where investment in plant and

machinery does not exceed rupees 25 lakh. A small enterprise is an enterprise
where investment in plant and machinery is more than rupees 25 lakh but does
not exceed rupees 5 crore. A medium enterprise is an enterprise where
investment in plant and machinery is more than rupees 5 crore but does not
exceed rupees10 crore. In case of above enterprises, investment in plant and
machinery is the original cost excluding land and building and the terms
specified by the Ministry of Small Scale Industries vide its notification no. S O
1722 (E) dt. October 5, 2006.

Enterprises engaged in providing or rendering services and whose

investment in equipment original cost excluding land and building and
furniture, fittings and other items not directly related to the service rendered or
as may be notified under the MSMED Act, 2006 are specified below:

A micro enterprise is an enterprise where investment in equipment does

not exceed rupees 10 lakh. A small enterprise is an enterprise where investment

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in equipment is more than rupees 10 lakh but does not exceed rupees 2 crore
and a medium enterprise is an enterprise where the investment in equipment is
more than rupees 2 crore but does not exceed rupees 5 crore.

MANUFATRUING SECTOR
Enterprise Investment in Plant & Machinery
Micro Enterprise Does not exceed 25 lakh rupees
Small Enterprise More than 25 lakh rupees but does not exceed 5 crore rupees
Medium Enterprise More than 5 crore rupees but does not exceed 10 crore rupees
SERVICE SECTOR
Enterprise Investment in Equipments
Micro Enterprise Does not exceed 10 lakh rupees
Small Enterprise More than 10 lakh rupees but does not exceed 2 crore rupees
Medium Enterprise More than 2 crore rupees but does not exceed 5 crore rupees

However, the new classification has come into effect from 1st July, 2020. The
earlier criteria of classification of MSMEs under MSMED Act, 2006 were
based on investment in plant & machinery / equipment. It was different for
manufacturing and service units. It was also very low in terms of financial
limits. Since then, the economy has undergone significant changes. A revision
in MSME criteria of classification was announced under Aatma Nirbhar Bharat
package on 13th May, 2020. This has been done in order to be realistic with time
and to establish an objective system of classification and to provide ease of
doing business.

As a result, a new composite classification for manufacturing and service units

has been notified on 26.06.2020, to facilitate the present and prospective
entrepreneurs. Now, there will be no difference between manufacturing and
service sectors. Also, a new criterion of turnover has been added in the previous
criterion of classification based only on investment in plant and machinery. The
new criteria are expected to bring about many benefits that will aid MSMEs to
grow in size. It has also been decided that the turnover with respect to exports
will not be counted in the limits of turnover for any category of MSME units
whether micro, small or medium. This is yet another step towards ease of doing
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business. This will help in attracting investments and creating more jobs in the
MSME sector. The change in criteria of classifying the MSMEs is to set to offer
major relief to the exporters.

In accordance with the provision of Micro, Small & Medium Enterprises

Development (MSMED) Act, 2006, the Micro, Small and Medium Enterprises
(MSME) are classified as below:

(i) A micro enterprise, where the investment in plant & machinery or

equipment does not exceed one crore rupees and turnover does not
exceed five crore rupees;
(ii) A small enterprise, where the investment in plant & machinery or
equipment does not exceed ten crore rupees and turnover does not
exceed fifty crore rupees; and
(iii) A medium enterprise, where the investment in plant & machinery or
equipment does not exceed fifty crore rupees and turnover does not
exceed two hundred and fifty crore rupees.

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2.2 ESSENTIAL FEATURES OR CHARACTERISTICS OF MSMEs

The following are the major features of micro, small and medium enterprises:-

a) A micro or small enterprise is generally one man show. Even the small
units which run by an individual or partnership firm, the activities are
mainly carried out by one of the partners. In practice, the others are
simply as sleeping partners who mainly assist in providing funds.
b) In case of micro enterprises, the owner himself/herself is a manager also.
Thus these units are managed in a personalised fashion. The owner has
first-hand knowledge of what is actually going in the business. He takes
effective participation in all matters of business decision taking.
c) Compare to large units, a micro industrial unit has a lesser gestation
period i.e. the period after which the return on investment starts.
d) The scope of operation of micro and small industrial undertakings is
generally localized catering to the local and regional demands.
e) Micro units use indigenous resources and therefore, can be located
anywhere subject to the availability of those resources like raw materials,
labour, etc.
f) Micro enterprises are fairly labour intensive with comparatively smaller
capital investment than the larger units. According to P C Mahalanobis
small scale units require very little capital.
g) Using local resources, micro enterprises are decentralized and dispersed
to rural areas. Thus, the development of micro enterprises in rural areas
promote more balanced regional development on the one hand and
prevents the influx of job seekers from rural areas to cities and urbanizing
centres, on the other.

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2.3 OBJECTIVES OF MSMEs

The major objectives of micro, small and medium enterprises are as follows:

i. To generate immediate and large scale employment opportunities with

relatively low investment and capital.
ii. To eradicate unemployment problem from the country.
iii. To encourage dispersal of industries to all over countries covering small
towns, villages and economically lagging regions.
iv. To bring backward areas too in the mainstream of national development.
v. To promote balanced regional development in the whole country.
vi. To ensure more equitable distribution of national income.
vii. To encourage effective mobilisation of country‟s untapped resources.
viii. To improve the level of living of people of the country.

2.4 BENEFITS OF MSMEs IN INDIA

The presence of MSMEs is a vital contributor to economic & social interests.

Here are some benefits to consider:

 MSMEs can avail of collateral free loans, making acquiring inventory

easier and boosting growth. They even have easy access to credit for
working capital.
 The low capital-output ratio of MSMEs lets them grow more with
minimal investments.
 They cater to a diverse market, which implies there are high chances of
even the most straightforward idea making good returns.
 Good government support, ensuring exposure to various support
programs, financial assistance, incentives and technical expertise.
 Ample employment opportunities to the semi-urban and rural population.

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 Subsidies on interest rates, patent registration and promoting industrial
activities.

2.5 DISADVANTAGES OF MSMEs IN INDIA

a. Pilling of interest: The first issue is the amount of interest that must be
paid. The interest that must be paid on loans accumulates rapidly. Despite
being the interest rate lower than other loans, the interest accumulates and
costs much money when paid. However, this obligation does not apply in
the case of bootstrapping or angel investing.

b. Tedious loan procedure: While the loan has a high acceptance rate, the
sanctioning procedure takes a long time. It takes a lot of time to apply for
an MSME loan since various documents must be submitted. Documents
such as income tax returns, profit and loss statements, bank account
information, bills of receipt and payment, and much more are required to
prove the lender‟s validity.
c. Difficulty scaling up and expanding: MSMEs often struggle to scale
up their operations and expand their businesses, as they lack the needed
resources, infrastructure, and expertise. This can limit their ability to
compete with larger and more established businesses.
d. Lack of skilled labour: MSMEs often struggle to attract and retain

skilled labour, as they cannot offer the same benefits and compensation as
larger businesses. This limits their ability to innovate and compete in the
market.
e. Lack of economic expertise: Many marketers lack the financial know-
how to influence the business in the right direction, even as they continue
to develop new strategies and plan the expansion of their present
business. Marketers without a strong understanding of economics could
not make important business decisions about MSME financing.

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2.6 ROLE & IMPORTANCE OF MSMEs IN THE ECONOMIC

DEVELOPMENT OF INDIA

The MSME sector has a substantial impact on various

aspects of the Indian economy.

1. Employment Generation
MSMEs are known for their labour-intensive nature. They provide
employment opportunities to a large population, particularly in rural and
semi-urban areas.
2. Promotion of Entrepreneurship
MSMEs encourage entrepreneurship and innovation by creating a fertile
ground for individuals to start and grow their businesses.
3. Regional Development
MSMEs are often in tier-2 & tier-3 cities and rural areas. This promotes
local development and reduces regional economic disparities.
4. Export Promotion
Many MSMEs are involved in export-oriented activities, contributing to
India‟s foreign exchange earnings.
5. Diversification
MSMEs are involved in manufacturing, services, agriculture and trade.
This diversification helps to reduce reliance on a single industry and
boosts economic resilience.
6. Innovation
MSMEs can quickly adapt to changing market conditions and consumer
demands. They often drive innovation in their respective sectors.
7. Reduction of Income Disparities
MSMEs help reduce financial burden and promote inclusive growth by
providing opportunities for self-employment and wage employment.

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 8. Support for Large Industries
MSMEs often serve as suppliers and subcontractors to more prominent
industries and contribute to the supply chain.

2.7 MAJOR CHALLENGES FACED BY MSMEs

The MSME sector in India deals with certain

challenges from time to time that can impact its
long-term growth. The major challenges faced by
this sector are as follows:

 Lack of skilled workforce

The MSME sector lacks skilled labour & workforce in the economy. This
can affect the quality of work and productivity.

 Access to finance
MSMEs often need help accessing finance from financial institutions.
This is due to need for more collateral, complex loan procedures and high
interest rates.

 Competition
MSMEs face competition from large corporations, e-commerce ventures
and others.

 Technology
MSMEs often use traditional methods and require more capital to invest
in the latest technologies. Poor technical expertise and inadequate access
to technology contribute to the problem.

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  Infrastructure
MSMEs are often based in areas with poor infrastructure such as roads,
electricity and telecommunications. This can make it difficult for them to
transport their goods and services.

 Regulation
MSMEs often have to comply with a complex set of rules. Being costly
and time consuming, it can divert resources from core business activities.

 Emergencies
MSMEs are also vulnerable to external shocks, such as economic
downturns and natural disasters.

2.8 REGISTRATION OF MSMEs

The registration process of an MSME requires the filling of an

Entrepreneurs memorandum (“EM”) with
District Industries Centre (“DIC”) of the
concerned area, after which, DIC shall issue an
acknowledgement along with EM number

As a part of its initiatives, for the case of registration of MSMEs, the ministry
vide press release dated 18th February, 2016, has started Udyog Aadhar
Memorandum which is an online registration system. (for details registration
visit http://msme.gov.in or http://dcmsme.gov.in/notification.pdf.)

 Who can apply for Registration?

All the micro, small and medium level business entities, as per above
mentioned parameter, can apply for MSME registration. Besides them,
limited liability partnership (LLP), private limited company (Pvt. Ltd.),
one person companies (OPC), proprietorship firms and public companies

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 can also apply for MSME registration. Even if company is in the
manufacturing line or service line, MSME registrations for both these
areas can be obtained.
Any entrepreneur having valid Aadhaar Number can apply for MSME
Registration Online. At present Aadhaar Number is mandatory for
issuance of MSME Certificate.

 What is the Procedure to obtain the MSME Registration?

An applicant must follow the steps indicated below in order to receive
the MSME Registration:
 Step 1:
The applicant should go to http://www.msmeregistration.org/ to
fill out the application.
 Step 2: Fill up Aadhaar card number—
After entering his or her Aadhar number, the applicant must click
the Generate OTP button. The OTP will be sent to the mobile
number associated with the Aadhar card.
 Step 3: Filling out the application—
A candidate must fill out the relevant information as well as his or
her personal information on the application form.
Name, address, PAN card, bank account info and other personal
info are necessary during the MSME registration process. A photo
of the candidate must also be uploaded.
While applying, a few other variables are considered, such as the
fact that MSME registration can be done in one of the following
categories:
(i) There is a new registration.
(ii) For those who have registered for EMI-II or Udyog Aadhar
Memorandum.
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 Additionally, new registrations are completed by supplying the
applicant‟s Aadhar info in one of two ways:
(i) Using a PAN Card to Register.
(ii) Registration without a PAN (Personal Identification
Number) (Permanent Account Number).
 Step 4: Submitting your application—
After the details have been filed, the applicant must apply.
 Step 5: Application processing—
Once the application is submitted, the executive will review it. If
there are any discrepancies, the executive will contact the
applicant via his or her registered E-mail address and phone
number to make the necessary adjustments.
 Step 6: Receiving the MSME certificate—
After the authority has assessed the application, the certificate for
MSME Registration will be issued.

2.9 GOVERNMENT SCHEMES AVAILABLE TO MSMEs

The Indian government has recognised the importance of the MSME sector and
has introduced various policies, incentives and support schemes to boost its
growth. These include access to credit, subsidies and ease of doing business:

Credit Guarantee Scheme for Micro and Small Enterprises (CGTMSE)

Pradhan Mantri Mudra Yojana (PMMY)
Micro Units Development and Refinance Agency (MUDRA)
Stand Up India
Prime Minister‟s Employment Generation Programme (PMEGP)
Skill India
Make In India
Production Linked Incentive (PLI) Scheme

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Additionally, the govt. also provides a variety of other support programs to
MSMEs, including marketing assistance, technology support and infrastructure
support.

MSMEs can avail of these schemes and programs by contacting the relevant
government agencies or financial institutions. They can also visit the
government‟s website for more information.

The impact of these govt. initiatives on MSMEs has led to:

a) Increased FDI inflows: India‟s FDI inflows reached US$ 84.84 billion
in 2021-22, a significant increase from US$ 45.15 billion in 2014-15.
b) Employment growth: Total employment in the manufacturing sector
increased from 57 million in 2017-18 to 62.4 million in 219-20.
c) Positive growth: The manufacturing sector showed a positive growth
rate of 11.8% in 2021-22, recovering from the COVID-19 pandemic‟s
adverse effects.

2.10 NATIONAL & INTERNATIONAL SCENARIO

India‟s MSME sector plays a vital role in the country‟s economy, contributing
significantly to GDP, employment & exports. Here‟s an overview of the
national scenario:

1. Key Contributions
 Employment Generation: MSMEs provide employment to
millions of people, especially in rural areas, contributing to socio-
economic development.
 GDP Contribution: MSMEs contribute around 30% to India‟s
GDP, driving economic growth and development.
 Export Earnings: MSMEs contribute significantly to India‟s
exports, earning foreign exchange & promoting international trade.

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 2. Challenges
 Access to finance: MSMEs face challenges in accessing formal
credit, hindering their growth & development.
 Infrastructure: Inadequate infrastructure, such as transportation,
storage and logistics, increases costs and reduces
competitiveness.
 Regulatory Framework: Complex regulations and bureaucratic
processes create challenges for MSMEs, increasing compliance
costs and administrative burdens.

3. Future Outlook
 Increases focus on sustainability: MSMEs are expected to
focus on sustainable practices, reducing environmental impact
and improving social responsibility.
 Growing importance of Technology: MSMEs will
increasingly adopt digital technologies to improve efficiency,
productivity and competitiveness.
 Government Support: Continued government support and
initiatives will play a crucial role in promoting MSME growth
and development.

India‟s MSME sector has been gaining recognition globally for its significant
contribution to the country‟s economy. Here are some key aspects of the
international scenario of India‟s MSME:

1. Global Trade Opportunities

 Digital Platforms: E-commerce platforms like Amazon, Flipkart
and India Mart enable MSMEs to reach a wider customer base
globally.

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  Export Initiatives: Government initiatives like the Export Credit
Guarantee Corporation (ECGC) & “Make in India” campaign
promote MSME exports.
 Cross-Border Collaborations: MSMEs can leverage digital tools
to explore international markets and collaborate with foreign
businesses.

2. Challenges in Global Market

 Regulatory Hurdles: MSMEs face challenges in complying with
multiple tax and labour laws, increasing costs and limiting
growth opportunities.
 Technology Gaps: Limited access to cutting-edge technologies
like cloud computing, artificial intelligence & automation hinders
competitiveness.
 Skilled Workforce: Shortage of skilled labour, particularly in
technical areas, affects MSMEs‟ ability to adopt new
technologies & grow.

2.11 LIST OF MSME COMPANIES IN INDIA

1. MindTree
Industry: Information Technology

Company Type: Private Limited

Location: Whitefield, Bangalore, Karnataka – 560066

Founded in: August 18, 1999

MindTree is a distinguished IT offerings agency based in Bangalore. It

gives a wide variety of software program development, IT consulting and
virtual transformation services to clients across numerous industries. Known for

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its innovative solutions, MindTree have undertaken essential initiatives for
global clients, which include the development of superior AI-pushed packages
and cloud-based structures.

2. Varroc Engineering
Industry: Manufacturing

Company Type: Partnership

Location: Pimpri-Chinchwad, Pune, Maharashtra – 411018

Founded in: 1988

Varroc Engineering is a leading MSME within the automotive sector. It

specialises in manufacturing a wide variety of products, together with light
structures, electricals and polymer additives for the automotive industry. The
organisation is renowned for its contributions to the most important automotive
initiatives and its dedication to innovation.

3. Dr. Reddy’s Laboratories

Industry: Healthcare

Company Type: Public Limited

Location: Hyderabad, Telangana – 500034

Founded in: February 24, 1984

Dr Reddy‟s Laboratories, established in Hyderabad, is a globally

renowned pharmaceutical business enterprise known for its research-driven
approach and the manufacturing of tremendous standard drug treatments. With
a robust presence in the healthcare industry, Dr Reddy‟s has been involved in
numerous tasks associated with drug discovery, improvement, and distribution,
contributing appreciably to international healthcare.

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 4. Orient Craft

Industry: Manufacturing

Company Type: Private Limited

Location: Gurugram, Haryana – 122018

Founded in: 1978

Orient Craft is a distinguished participant in the textile and garment

manufacturing sector. It specialises in the production of a wide variety of
fashion clothing, catering to both local and global markets. The company has
played a pivotal role in fashion retail and has established a strong reputation for
exceptional innovation.

5. Assam Carbon Products

Industry: Engineering

Company Type: Private Limited

Location: Guwahati, Assam-781026

Founded in: 1963

Assam Carbon Products is a prominent manufacturer of carbon-based

components. It produces a wide range of high-quality carbon brushes, graphite
products and various mechanical and electrical carbon components. Its products
are integral to the functioning of machinery and electrical systems in industries
spanning automotive, electronics and more. As known for precision and
reliability, the company has successfully supplied essential components for
numerous projects in the manufacturing and engineering sectors.

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 CHAPTER 3

PRESENTATION OF DATA, ANALYSIS &

FINDINGS

3.1 DATA ANALYSIS & PRESENTATION OF DATA

Data Analysis is a process of inspecting, cleansing, transforming and

modelling data with the goal of discovering useful information, informing
conclusions and supporting decision-making.

In this chapter we will focus on how MSME has contributed to the Indian
economy in the past 5 years with the help of tables and diagrams:

1. Share of MSME Gross Value Added (GVA) in all India GDP

Table 1: MSME GVA Share in India’s GDP

YEAR Share of MSME GVA in GDP

2018-19 30.5%
2019-20 30.5%
2020-21 27.3%
2021-22 29.6%
2022-23 30.1%

Interpretation:

The MSME sector in India has consistently demonstrated a remarkable

resilience and adaptability, significantly contributing to the nation‟s GDP over
the years. From the table, it can be said that the Gross Value Added (GVA) by
MSMEs in India‟s GDP was 30.5% in 2018-19, rising to 30.1% in both

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2022-23. Even amid the challenges posed by COVID-19 pandemic, the sector
sustained a contribution of 27.3% in 2020-21, rebounding to 29.6% in 2021-22.

FIGURE 1

30.5
30
29.5
29
28.5
28
27.5
27
26.5
26
25.5
2018-19 2019-20 2020-21 2021-22 2022-23

(Source: pib.gov.in)

2. Share of Export of MSME-related Products in all India Exports

Table 2: MSME’s Share of Export
YEAR Share of Export
2019-20 49.75%
2020-21 49.35%
2021-22 45.03%
2022-23 43.59%
2023-24 45.73%

Interpretation:

MSMEs exports have witnessed a remarkable rise during the periods 2019-20 &
2020-21. However, in the mid of Covid-19 its export share starts declining
showing 45.03% in 2021-22 which further reduces to 43.59% in 2022-23. In the
post-COVID period, it had a sharp rise in export during 2023-24 of 45.75%.

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 FIGURE 2

50
49
48
47
46
45
44
43
42
41
40
2019-20 2020-21 2021-22 2022-23 2023-24

(Source: pib.gov.in)

3. Estimated number of MSME units in India

Table 3.A: Estimated no. of MSME (Activity wise)
Activity Category Estimated no. of Enterprises (in lakh) Share (%)
Rural Urban Total
[1] [2] [3] [4] [5]
Manufacturing 114.14 82.50 196.65 31
Electricity 0.03 0.01 0.03 0
Trade 108.71 121.64 230.35 36
Other Services 102.00 104.85 206.85 33
All 324.88 309.00 633.88 100

Interpretation:

The number of MSME units established under Trade sector is the largest of all
the sectors. It covers a large share of 36% in Trade sector considering both rural
and urban areas. Followed by the manufacturing sector whose 31% and other
services 33% is covered by MSME. From the table it‟s also cleared that the
least share that MSME covers is of Electricity sector which is 0.0047%
(approx.).

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 FIGURE 3.A

Distribution of Estimated MSMEs by Nature

of Activity
Electricity
1%

Trade
Manufacturing 35%
31%

Other Services
33%

(Source: MSME Annual Report 2023-24)

Table 3.B: Distribution of Enterprises Category Wise

(Numbers in lakh)

Sector Micro Small Medium Total Share (%)

Rural 324.09 0.78 0.01 324.88 51
Urban 306.43 2.53 0.04 309.00 49
All 630.52 3.31 0.05 633.88 100

Interpretation:

Micro sector with 630.52 lakh estimated enterprises accounts for more than
99% of total estimated no. of MSMEs. Small sector with 3.31 lakh & Medium
sector with 0.05 lakh estimated MSMEs accounted for 0.52% and 0.01% of
total estimated MSMEs respectively. Out of 633.88 estimated no. of MSMEs,
324.88 lakh MSMEs (51.25%) are in rural area & 309 lakh MSMEs (48.75%)
are in the urban areas.

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 FIGURE 3.B

Percentage Share of Rural and Urban MSMEs

in the country

Urban Rural
49% 51%

(Source: MSME Annual Report 2023-24)

4. Type of Ownership of Enterprises

Table 4: Percentage Distribution of Enterprises Owned By
Male/Female Entrepreneurs Wise
Category Male Female All
Micro 79.56 20.44 100
Small 94.74 5.26 100
Medium 97.33 2.67 100
All 79.63 20.37 100

Interpretation:

Out of 633.88 MSMEs, there were 608.41 lakh (95.98%) MSMEs were
proprietary concerns. There was dominance of male in ownership of proprietary
MSMEs. Thus, for proprietary MSMEs as a whole, male owned 79.63% of
enterprises as compared to 20.37% owned by female.

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 FIGURE 4

2.67
Medium
97.33

5.26
Small
94.74

20.44
Micro
79.56

0 20 40 60 80 100 120

Female Male

(Source: MSME Annual Report 2023-24)

5. Employment
Table 5.A: Estimated Employment in the MSME Sector
(Activity Wise)
Broad Activity Employment (in lakh) Share (%)
Category Rural Urban Total
[1] [2] [3] [4] [5]
Manufacturing 186.56 173.86 360.41 32
Electricity 0.06 0.02 0.07 0
Trade 160.64 226.54 387.18 35
Other Services 150.53 211.69 367.22 33
All 497.78 612.10 1109.89 100

Interpretation:

As per the table shown above, MSME sector has been creating 11.10 crore jobs
i.e. 360.41 lakh in Manufacturing, 0.07 lakh in Electricity, 387.18 lakh in Trade
& 362.22 lakh in Other Services, in the rural and urban areas across the country.
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 FIGURE 5.A

Employment in MSME Sector

(Nature of Activity Wise)
Electricity
0%
Manufacturing Trade
32% 35%

Other Services
33%

(Source: MSME Annual Report 2023-24)

Table 5.B: Distribution of Employment by type of Enterprises in Rural &

Urban Areas

(Numbers in lakh)

Sector Micro Small Medium Total Share (%)

Rural 489.30 7.88 0.60 497.78 45
Urban 586.88 24.06 1.16 612.10 55
All 1076.19 31.95 1.75 1109.89 100

Interpretation:

Micro sector with 630.52 lakh estimated enterprises provided employment to

1076.19 lakh persons that in turn accounts for around 97% of total employment
in the sector. Small sector with 3.31 lakh and Medium sector with 0.05 lakh
estimated MSMEs provided employment to 31.95 lakh (2.88%) & 1.75 lakh
(0.16%) persona of total employment in MSME sector respectively.

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 FIGURE 5.B

Percentage Share of Employment in

Rural & Urban Areas in the Country

Rural
45%
Urban
55%

(Source: MSME Annual Report 2023-24)

3.2 FINDINGS

From this survey, I have analysed & found that:

 The MSME‟s share in India‟s GDP was largest in the year 2018-19 and
also in 2019-20.
 The MSME sector has also been able to maintain the share of GDP even
after the COVID-19 pandemic.
 In case of exports, the share of MSME was largest in the year 2019-20
and also in the year 2020-21.
 However, after COVID-19 pandemic, the share of export of MSME gets
reduced.
 The number of MSME units in India had a largest share in the Trade
sector.
 In Electricity sector, the MSME had the least share.
 In Rural areas, the distribution of micro, small and medium enterprises is
higher than that in Urban areas.

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 The overall distribution of MSME units in all the sectors considering in
both urban and rural areas is 633.88 lakh.
 As far as type of ownership of enterprises in India is concerned the male
have a greater dominance in all the sectors than female.
 The share of employment in the MSME sector is the most in Trade
business.
 The MSME has the least employment share in Electricity sector.
 The distribution of employment is the most in Urban areas than that in
Rural areas.

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 CHAPTER 4
CONCLUSION & RECOMMENDATION

4.1 CONCLUSION

From this analysis, we can conclude that the Micro, Small & Medium
Enterprises (MSME) have been contributing significantly to the expansion of
entrepreneurial endeavours through business innovations. The MSME are
widening their domain across sectors of the economy, producing diverse range
of products and services to meet demands of domestic as well as global markets.

MSMEs are primarily located in rural and underdeveloped areas contributing to

economic growth and job creation. The MSME in India are playing a crucial
role by providing large employment opportunities at comparatively lower
capital cost than large industries as well as through industrialization of rural &
backward areas, inter alia, reducing regional imbalances, assuring more
equitable distribution of national income and wealth. They promote innovation
and are the backbone of India‟s start-up ecosystem.

Hence, MSMEs are of great importance in India‟s economic development,

serving as engines of growth and drivers of socio-economic progress.
Moreover, MSMEs have demonstrated resilience, even during challenging times
such as the COVID-19 pandemic, playing a crucial role in India‟s economic
recovery. Government interventions such as relief measures and financial
support schemes have further boosted the sector‟s ability to withstand economic
shocks and continue driving growth.

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4.2 RECOMMENDATION

MSMEs being the growth engines of India and driving force of development
still have some loopholes and drawbacks that they need to consider:

 MSMEs are expected to focus on sustainable practices, reducing

environmental impact and improving social responsibility.
 MSMEs can leverage digital technologies to improve efficiency,
productivity and competitiveness.
 MSMEs can focus on innovation and Research & Development to
develop new products and services, driving growth and competitiveness.
 MSMEs can explore international markets, increasing exports and
earning foreign exchange.
 MSMEs can explore emerging industries like renewable energy, electric
vehicles and biotechnology.
 Strategic partnerships can help MSMEs scale faster and access new
markets.
Here are some of the recommendations given by me to the India‟s
MSMEs to improve their performances further.

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 BIBLIOGRAPHY

All the above information and data is being collected by me from the following
books and websites:

BOOK:

 “Entrepreneurship Development and Business Ethics”

By: Dr. Buddhadeb Chandra and Dr. Bhaskar Biswas
TEE DEE PUBLICATIONS

WEBSITES:

 https://www.smfgindiacredit.com
 https://www.onedf.com
 https://pib.gov.in
 https://msme.gov.in

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