The Engine that powers India

In the last two decades, there has been a concerted effort to modernize the MSME sector in India. An estimated 2.6 crore units of MSMEs contribute to 8 percent of the country’s GDP of an estimated US$1.5 trillion (source: CNN Country Report). It contributes to 40 per cent of India’s roughly US$210 billion annual exports.

The sector employs over six crore people. An estimated 5 crore are male workers and about a crore are female workers. The workforce is almost equally divided between manufacturing and services sector. About 2.4 crore units are proprietorships. An estimated 65 lakh units depend on coal and oil as primary sources of power and 48 lakh on electricity. This shows which way the country is headed.

In a country of 100 crore people, with over 40 crore engaged in economic activity, MSME’s contribution is perceived to be crucial. MSME sector alone has the ability to minimize the 11 percent unemployment rate in the country. It alone can power a growth hungry developing nation – eyeing over 9 percent growth
in GDP.

The Dare-CRISIL SME Ratings report on the Top 10 MSME sectors covers those that have seen an impressive surge in economic activity.

Also read: Mas Infotainment launches DailDesk For SMEs

The Definition of MSME
The MSME sector still uses a three-tier definition proposed way back in 1999. As per this recommendation, all businesses which have made an investment in plant and machinery upto Rs.10 lakh were called “tiny units.” Those with investment between Rs.10 lakh to Rs.100 Lakh were labelled Small Scale Industries (SSIs); and medium industries had investment of anywhere between  Rs. One crore
to Rs.10 crore.

The same categories have been retained but the nomenclatures have changed with the times. The tiny units are now called “micro enterprises”. The SSIs are now called Small Enterprises and the Medium units, Medium Enterprises.

MSME cluster density in India
MSMEs in the India are clustered around an estimated 626 locations across India. There is an estimated 6,000 clusters of micro or artisan based industries in India.