EMERGING CONTRIBUTORS TO INCLUSIVE GROWTH

MICRO SMALL AND MEDIUM ENTERPRISES

S.K.AGGRAWAL,MA., LL.B., M.B.A., F.C.S.

DIRECTOR,VIMAL ORGANICS LTD.

SEPTEMBER 2, 2010

SME Sector is important, needs no elaborationHow and why SME sector is successful and is the

economic catalyst for the country ?

Let us look at some data compiled by

MSME MINISTRY ANNUAL REPORT 2009-2010

GROWTH AND PERFORMANCE OF MICRO, SMALL AND MEDIUM ENTERPRISES (MSMEs)

The Sector accounts for :28 million units65 million people employed6000 products45% of manufacturing output40% of the total exports of the country

NUMBER OF ENTERPRISES IN MSME SECTOR

EMPLOYMENT IN MSME SECTOR

Recognizing the contribution and potential of the sector, the definitions and coverage of the Small Scale Industry (SSI) sector were broadened significantly under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 which recognized the concept of “enterprise” to include both manufacturing and services sector besides, defining the medium enterprises.

MSME Sector – Higher Growth Rate viz-a-viz overall industrial sector

COMPARATIVE DATA ON GROWTH RATES OF MSE SECTOR

YEAR GROWTH RATE OF IIP (BASE 2001-02) (%)

IPP (OVERALL INDUSTRIAL

GROWTHRATE OF SECTOR) (%)

2002-2003 8.68 5.7

2003-2004 9.64 7.0

2004-2005 10.88 8.4

2005-2006 12.32 8.1

2006-2007 12.60 11.5

2007-2008 13.00 8.0

NATURE OF ACTIVITY

SECTOR (%)

Manufacturing/ Assembling/ Processing

66.67 %

Repairing & Maintenance 16.33 %

Services 17.00 %

TYPES OF MANAGEMENT/OWNERSHIP

No. of enterprises managed by

Male 86.17 %

Female 13.83 %

Total 100 %

TYPES OF ORGANIZATIONDISTRIBUTION BY TYPE OF ORGANISATION

Proprietary 90.36%

Partnership 3.85 %

Pvt. Company 2.69 %

Pub. Ltd. Company 0.53 %

Cooperatives 0.30 %

Others 2.27 %

According to YouGov and Legatum Institute Survey of 4000 business SME in China and India, the Indian entrepreneurs say their main motivation is independence, being one’s own boss.

- reported in the Economic Times dt. 11.08.2010

FICCI has set up :FICCI – MSME Intellectual Property Facilitation

Centre in association with MSME Ministry, Govt. of India

SME STOCK EXCHANGE SMEs contribute around 20% of GDP and are the

largest generator of employment (approximately 25 million). In India, SME sector is the second largest employer, after agriculture. With the Indian economy growing at more than 9 percent and size of the economy crossing the $1 trillion mark, the need of SMEs to raise capital is becoming increasingly critical – SEBI discussion Paper

1. SEBI Issued a modal listing agreement for SMEs seeking listing on SME Exchange 12 Aug 2010

2. “ At present, nearly 3000 SMEs trade through BSE which number is expected to grow manifold”

ET, Friday June 4,20103. There are 210,000 listing under the heading “ SME

Stock Exchange in India,” at the Google Search Engine.

.

1 Instant decision makingNo notes, no papers, no consultationGut feeling

2 Personal Knowledge3 Personal first hand information 4 No time clock for work (0 HRS to 24 HRS )5 Often times –more often than not – everyone in

the family is a contributor to business

6 Negligible labour problems: interpersonal relationship between the owners and the employees is intimate.

7 And when he needs, he can always take help from outside, but here he always remembers (even if he has not read E. Dickinson)

“That Love is all there is, Is all we know of love,

it is enough,the freight should be proportionate to the

groove”.

Achievement motivation motivates none more than a SME entrepreneur.

Here everything is in First Person Singular, there is hardly any plurality.

Centralized and yet decentralized

Personal attention to every detail; he would almost personally know all his employees, know his customers and know his suppliers. He would also know, again personally, all the associates in the Electricity Department, Excise, ST, IT, Local Police Station, etc.

SME sector- there is no unemployment; in fact it is a big fraud by Politicians that there is unemployment. Where are the men available ?

SME sector is the largest provider of trained manpower to large scale sector

RISING INDIAN MIDDLE CLASS

Consumer spending in Asia is likely to reach $32 trillion by 2030

Asia to contribute 43% of worldwide consumption in next 20 years

205 million Indians joined the ranks of those spending $2 to $20 per day from 1990 to 2008

Over the next two decades, the Indian middle class is expected to touch 1 billion mark.

The Economic Times, 20th August 2010, Page-4

This confirms that an individual CS can carve out a profitable niche for himself.

be a job-provider as against a job-seeker turn employer and not worry to be employee be a master of his own destiny Instead of working within a Delegation of Powers

given by others, enjoy all the power given unto himself.

Untold , Unlimited freedom - financially

- emotionally - psychologically