The role of Micro, Small and Medium Scale Enterprises in India 11 December 2008 Consulate General of India Hong Kong 1.

11 December 2008Consulate General of India

Hong Kong

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As elsewhere, MSMEs are accepted as the engine of economic growth and for promoting equitable development. MSMEs are credited with generating highest rates of employment growth and account for a major share of industrial production and exports.

MSMEs have consistently registered higher growth rates compared to the overall industrial sector.

A major advantage of the sector is its employment potential at low capital cost.

Additionally, the sector is labour intensive - estimates are that it is almost 4 times higher than the large enterprises.

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Small Scale Unit USD 100,000

Medium Scale Unit USD 200,000

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Estimated that , in terms of value, MSMEs account for about 39% of the manufacturing output and around 33% of the total export of the country. 

Presently, this sector employs an estimated 31 million persons spread over 12.8 million enterprises.

Accounts for 91% of total Industrial Units Over 21,400 units are ISO 9000/14001 certified Wide range of Products - Over 8000

TRENDS IN GROWTH4

YEAR GDP%INDUSTRIAL SECTOR

%

MSME SECTOR %

2000-01 4.4 4.9 8.09

2001-02 5.6 2.7 6.08

2002-03 4.4 5.3 7.41

2003-04 8.5 7.0 8.59

2004-05 6.9 8.4 9.96

2005-06 8.0 8.1 10.4

2006-07 9.0 11.5 13.00

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PRODUCTS OF MSMEsMore than 8000 products

Readymade Garments

Chemicals and Pharmaceuticals

Engineering Goods

Processed Foods

Leather Products

Marine Products

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MAJOR EXPORT PRODUCTSMAJOR EXPORT PRODUCTS

Generation of Employment

Dispersal of Economy

Utilization of Local Skills and Resources

Meeting Demands Locally, as Feasible

MSME AS TOOL OF STATE POLICYMSME AS TOOL OF STATE POLICY

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2006 ACT : CLASSIFICATION2006 ACT : CLASSIFICATION

Concept of ‘Enterprises’, as against ‘Industries’

Enterprises are engaged either in MANUFACTURE or SERVICES

Protection – Hundreds of items reserved for exclusive production

High Tariff Barriers to protect local units Purchase Preference by Government Equity / Foreign Investment Restrictions NOW, almost all gone

MOVE FROMPROTECTION TO COMPETITION

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Benefits from JVs/TCs to foreign partners

Subjective benefits to Indian SMEs from JV/TCs

Improvement in Profitability/cost competitiveness

Market knowledge

Growth in overseas business/exports Brand reputation

Growth in domestic market share Managerial skills

Higher productivity and resource utilization

Credibility

Getting access to quality labour pool Minimization of risks

Strong research capability Others

By States

Industrial land, plots, sheds and workplaces Roads Power distribution Institutional buildings

By Federal Government

Communication Power generation Funding to States / Private players Transportation

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GENERAL INFRASTRUCTURE SUPPORTGENERAL INFRASTRUCTURE SUPPORT

Thank you for your attention

For more information, please contact us

Consulate General of India in Hong Kong 16-D, United Centre,

95 Queensway,Hong Kong

 Tel: +852 28664027Fax: +852 28664124

 E-mail: [email protected]

Website: www.indianconsulate.org.hk

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GDP (at current prices) US$ 830 billion

GDP Growth Rate 9.4%

PPP 4th largest economy; US$ 4.2 trillion

Per capita Income (2006-07) (current prices)

US$ 651

FDI (2006-07) US$ 19.5 billion

FII (2006-07) US$ 7 billion

Exports - (April 06 - March 07) (April-October 07)

US$ 124.6 billion (up 21%)US$ 85.5 billion (up 21%)

Imports - (April 06 - March 07) (April-October 07)

US$ 181.3 billion (up 26.4%) US$ 129.9 billion (up 25%)

Main trading partners USA, China, EU, UAE, Saudi Arabia Singapore, Japan

IndiaIndia ChinaChina

Area (m kmArea (m km22)) 3.33.3 9.69.6

Arable area (m kmArable area (m km22)) 1.601.60 1.25 1.25

Population (billion)Population (billion) 1.01.0 1.31.3

GDP by sector:GDP by sector:

Services (%)Services (%) 54.654.6 39.539.5

Agriculture (%)Agriculture (%) 17.517.5 11.811.8

Industry (%)Industry (%) 27.927.9 48.748.7

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