What is the role of MSME in India?
The Indian MSME sector can be considered the backbone of the Indian economy. The MSME sector worked tirelessly to protect India’s economy from various global crises. The thriving MSME sector has prevented several potential external adversities.
In India, the list of MSME-registered businesses will soon reach 63.4 million. companies under MSME account for 6.11% manufacturing GDP in India. The MSME sector also contributes to the GDP of India in the service sector (24.63%) and manufacturing (33.4%).
Over 120 million people are employed by the MSME sector, making it one of our largest sources of employment. The MSME sector, which is concentrated in rural areas and employs a large number of people in rural areas due to the fact that most MSME units are located there, is an important source of employment for rural residents.
What is the classification for MSMEs?
Micro, small and medium-sized enterprises (MSME) are included in the MSME segment. Each section is classified according to specific criteria. Please find below a table indicating the classification parameters –
| Definition | Classification Parameters |
| Micro Enterprise | Plant & Machinery – Rs. Annual Turnover of up to Rs. 5 crores |
| Small Enterprise | Plant & Machinery – Rs. Annual Turnover within Rs. 50 crores |
| Medium Enterprise | Plant & Machinery – Rs. Annual Turnover within Rs. 250 crores |
Which industries fall under MSME?
The following industries fall into the MSME category.
- Leather Goods
- Moulding
- Natural Fragrance
- Placement Services
- Training Institutes
- Energy Efficient Pumps
- Photocopying centres
- Beauty Parlour
- Creches
- Garages for auto repairs
- X-Ray clinics
12 Tailoring Units
- Rent Equipment
- Photo labs
- Repairs to agricultural machinery
- Computer-based data Processing
- STD/ISD booths
- Retail trade
- MSO dealers who sell Dish Antenna
- Laundry
- Toughened Metal Ware
- Automotive Electronic Components
- Electronic Security Services
- Almirahs and steel cocks manufacturing.
- Engineering and Fabrication
- Small white goods dealers
- Micronutrients For Plants
- Ayurvedic Products
- Khadi products and materials
- Handicrafts–spinning and weaving
- Paper for printing and other products
- Coir Industry
- Manufacturing furniture and wood products
- Poultry Farming
- Sales and service of bicycle parts
- Stationery Items
- Call Centre
- Rubber Products
- IT service provider
- Testing labs for industry
- Sales of auto components
- Ceramics and Glass Products
- Wholesale and retail business
How Do MSME Loans Work
MSME businesses, despite being the backbone of the economy, have never been allowed to benefit from formal banking. These units are therefore heavily dependent on private funding sources whenever they need additional funds. On April 8, 2015 the union government recognized this gap and launched the PradhanMantri Mudra Yojana to address the MSME segment. The PMMY scheme is a business loan that targets the MSME segment. In addition to PMMY, other business loans schemes were introduced to help boost this segment.
What is an MSME Business Loan (Loan for Small and Medium Enterprises)?
You may require additional funds as an entrepreneur to fulfill certain business needs. For example, if you need to execute a large order. You may also have plans to expand or diversify your business, which require money. It is better to get a loan than risking your own money. The majority of leading banks and financial institutions offer packages for business loans. Choose the best scheme for your business and apply for a loan.
When choosing a financier, you should consider the interest rates that they offer. Each financial institution posts its business loans packages on its official website. You can determine the eligibility criteria for a particular financier by visiting their official website. On their official websites, banks also have business loan EMI calculator embedded for public use. This calculator will help you calculate your monthly repayment amount via EMI. It can be used to better plan your finances.
The conclusion of the article is –
The extensive list of MSME companies in India, and their widespread presence in India make it clear that MSMEs are the foundation of the Indian economy. In order to promote the growth of the MSME sector, the Government of India has also recognised the importance of the segment. It is high time that this segment was given the attention it deserves and enough encouragement to grow and thrive.