The United Nations observes June 27 as ‘Micro, Small, and Medium-sized Enterprises Day’ to raise awareness of the tremendous contributions of MSMEs to the achievement of the United Nations Sustainable Development Goals (SDGs).

Why is the MSME sector important worldwide?

• MSMEs account for 90 per cent of businesses, 60-70 per cent of employment and 50 per cent of GDP worldwide.

• They also account for the majority of new job creation.

• As the backbone of societies everywhere they contribute to local and national economies and to sustaining livelihoods, in particular among the working poor, women, youth, and groups in vulnerable situations.

• MSMEs hold the potential to transform economies, foster job creation, and promote equitable economic growth if given adequate support. 

Need policies to overcome challenges

• Multiple simultaneous shocks and crises have disturbed the global working environment for entrepreneurs and MSMEs. 

• In addition, conflicts, commodity dependence, geopolitical tensions, and pandemics drive social and economic instability, making MSMEs extremely vulnerable to rising inflation and supply chain disruptions.

• Among the most vulnerable, women and youth-owned enterprises are often at risk of external shocks. This is when the percentage and overall number of business formations by women and youth are increasing worldwide. 

• Facing limited access to affordable finance, capacity-building support, partnership networks, and global markets, women and young entrepreneurs need help to overcome the numerous challenges that frequently stifle the growth of their businesses.

• Policies that strengthen capacities and support MSMEs development and entrepreneurship for women and youth need to be at the forefront to address those challenges, lower and remove barriers, and provide an operating environment for women and youth-owned businesses to grow.

MSME sector in India

• MSMEs are the backbone of Indian economy. Operating in different areas across the country, more than six crore MSMEs have a crucial role to play in building a stronger and self-reliant India. 

• As per the National Sample Survey (NSS) 73rd round, conducted by National Sample Survey Office during the period 2015-16, there were 633.8 lakh unincorporated non-agriculture MSMEs in the country engaged in different economic activities.

• Micro sector with 630.52 lakh estimated enterprises accounts for more than 99 per cent of total estimated number of MSMEs. Small sector with 3.31 lakh and Medium sector with 0.05 lakh estimated MSMEs accounted for 0.52 per cent and 0.01 per cent of total estimated MSMEs, respectively. 

• Out of 633.88 lakh estimated number of MSMEs, 324.88 lakh MSMEs (51.25 per cent) are in rural areas and 309 lakh MSMEs (48.75 per cent) are in urban areas. 

• These small economic engines have a huge impact on the country’s GDP-making a contribution of 29 per cent. They contribute to almost half of exports from the country. Also, more than 11 crore people are employed in the MSME sector.

• MSMEs are complementary to large industries as ancillary units and this sector contributes significantly in the inclusive industrial development of the country.

• The MSMEs 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.

Definition of Micro, Small and Medium enterprises:

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 and machinery or equipment does not exceed Rs 1 crore and turnover does not exceed Rs 5 crore.

ii) A small enterprise, where the investment in plant and machinery or equipment does not exceed Rs 10 crore and turnover does not exceed Rs 50 crore.

iii) A medium enterprise, where the investment in plant and machinery or equipment does not exceed Rs 50 crore and turnover does not exceed Rs 250 crore.

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