Small and medium enterprises in Global Trade

1. Small and medium enterprises in Global Trade

2. Objectives • Definition • Features • Importance

3. Definition of MSME T Government of India enacted the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 in terms of which the definition of micro, small and medium enterprises is as under: a)Enterprises engaged in the manufacture or production, processing or preservation of goods as specified below: (i) A micro enterprise is an enterprise where investment in plant and machinery does not exceed Rs. 25 lakh; (ii) A small enterprise where investment is more than Rs. 25 lakh but does not exceed Rs. 5 crore; and (iii) A medium enterprise where investment is  more than Rs.5 crore but does not exceed Rs.10 crore.

4. Definition of MSME (b) Enterprises engaged in providing or rendering of 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 the investment in equipment does not exceed Rs. 10 lakh; • A small enterprise where the investment in equipment is more than Rs.10 lakh but does not exceed Rs. 2 crore; and • A medium enterprise where the investment in equipment is more than Rs. 2 crore but does not exceed Rs. 5 crore.

5. The catalyst to growth • promoting equitable development. • employment potential at low capital cost. • registered higher growth rate compared to the overall industrial sector • agility and dynamism • innovativeness and adaptability

6. The data • As per available statistics (4th Census of MSME Sector:2009), this sector employs an estimated 59.7 million persons spread over 26.1 million enterprises. • It is estimated that in terms of value, MSME sector accounts for about 45% of the manufacturing output • 9% of GDP • and around 40% of the total export of the country. 

7. Background • Pre 1951: Low entrepreneurial initiative • 1951-91: Protection and growth • Post 1991: Competition amidst LPG and assistance

8. Objectives for Govt · High contribution to domestic production · Significant export earnings · Low investment requirements · Operational flexibility · Location wise mobility · Less imports · Capacities to develop appropriate indigenous technology · Import substitution · Contribution towards defense production · Technology – oriented industries · Competitiveness in domestic and export markets

9. Limitations of SMEs · Low Capital base · Concentration of functions in one / two persons · Inadequate exposure to international environment · Inability to face impact of WTO regime · Inadequate contribution towards R & D · Lack of professionalism

10. SMEs have been established in almost all-major sectors in the Indian industry suchas: · Food Processing · Agricultural Inputs · Chemicals & Pharmaceuticals · Engineering; Electricals; Electronics · Electro-medical equipment · Textiles and Garments · Leather and leather goods · Meat products · Bio-engineering · Sports goods · Plastics products · Computer Software, etc.

11. Provisions by Govt. • .The domestic commercial banks are expected to enlarge credit to priority sector • and ensure that priority sector advances (which include the micro and small enterprises sector) constitute 40 per cent of Adjusted Net Bank Credit (ANBC • As on March 2011 there are 1220 specialized MSME branches

12. Provisions by Govt. Budget: 2013-14 1. Preference Benefits (non-tax) to continue for 3 years for enterprises growing for 3 years 2.Refinance SIDBI (Small Industries Development Bank of India) fund enhanced from INR 5,000 crore to INR 10,000 crore 3.A fund allocation of INR 500 crore for SIDBI to set-up the Factoring fund. 4.INR 2,200 crore fund allocation for setting up 15 additional Centres for R&D for MSMEs.

13. Provisions by Govt. Budget: 2013-14… 5.Expenditure on Incubator to qualify as CSR (Corporate Social Responsibility) activity to be notified by the Ministry of Corporate Affairs. 6.MSME Exchange listing for start-ups is facilitated. • 7.Sector specific duty reductions for Leather & Gems & Jewellery.

14. responsibility for promotion and development of SME • Primary responsibility for promotion and development of SME: State Govt. • Role of Ministry of MSME to support the SG in their efforts to dev their MSMEs.

15. National Small Industry Corp ltd: NSIC • Khadi and Village Industry commission :KVIC • Coir Board • And 3 National Level entrepreneurship development Institutes • National institute for entrepreneurship and small business development (NIESBUD): NOIDA, UP • NI-MSME: National Institute for MSME: Hyderabad • Indian Institute of Entrepreneurship: Guwahati

16. How institutions and resources affect Entrepreneurship • Institutions and Entrepreneurship • Formal : how firm starts.. Registration, licensing, incorporation, tax etc.. • More friendly the better is SME growth • Informal Institutions: cultural values and norms.. • Individualistic and low uncertainty-avoidance societies foster SME growth and vice v ersa..

17. Growing the entrepreneurial firm: major characteristics of Enterprise • Growth: different growth strategy • Innovation: explore and flourish.. Ensure sustenance.. • Financing: formal (Sweden,US) and informal finance(China). Recently MFI.. • Internationalization.. • Firms are born global… international joint ventures • Or firms internationalize

18. Internationalization

19. Summary • Def: MSME • Obj • Advantages • Disadvantages • SMEs and globalization.. Why, how, and will it be sustainable