Micro, Small and Medium Enterprise – Gearing Up To Global Competitiveness & Challenges

Abstract

The Micro, Small and Medium Enterprise [MSMEs] Plays a significant role in backing the growth of the country and can be referred as backbone of the Indian economy. With its major contribution in Production export and employment, it has become an integral part of the Indian economic growth MSME contribute 8% of the country’s GDP, 45% of manufactured output and 40% of export. This sector is a huge generator of employment. It Provides employment to 60 million people through 26 million enterprises. A Cluster is defined as the collection of enterprises producing same of similar Product or service or engaged in the same line of manufacturing activities or services located within an identifiable area. The production of Micro, Small and medium enterprises was Rs 9,82,919 Crore in 2009-10 while it stood at Rs 8,80,805 Crore in the year 2008-09 Thus during 2009-10 MSMEs output registered 11.6% growth. Micro, small and Medium Enterprises MSMEs] play a dominant role in the economic and social development of the country. It makes significant contribution to the country’s GDP manufacturing output, export and employment generation. MSMEs contribute 8% of the country Gross Domestic product [GDP] 45% of manufactured output and 40% of Export. Indian banks have restructured at least 5% of their loans across sectors and 10.15% of such loans have turned bad for most banks. Banks are recasting loans given to borrowers in the airline real estate and microfinance sectors. RBI has increased its key rates 11 times since March 2010, forcing commercial banks to make money costlier for individual and corporation by at least 2 percentage points. Indian banks had loaned Rs 4.5 trillion to micro and small enterprises. Loans to these units grew 21.5% in 2010-11. According to RBI credit flow to MSMEs doubled within the period of two years since 2006-07. In 2006-07 the credit flow to the sector was Rs 1, 27,000 crore and in 2007-08 it reached Rs 2,13,000 crore and in 2008-09 at Rs 2,57,000 crore. In September 2009 the total outstanding credit stood at Rs 3,23,565 crore and in February 2010 it further increased to Rs 3,69, 866 crore. © Research India Publications.