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As per the SMSE Act, 2006 the MSME are classified in two classes
—manufacturing and service enterprises—and they are defined in terms of investment in plant & machinery52. The Micro, Small and Medium Enterprises (MSMEs) play a very vital role in the economy—3.6 crore such units employ 8.05 crore people and contribute 37.5 per cent to the country’s GDP. The sector has huge potential for helping address structural problems like, unemployment, regional imbalances, unequal distribution of national income and wealth. Due to comparatively low capital costs and their forward- backward linkages with other sectors, they are headed to play a crucial role in the success of the Make in India initiative.
Realising the importance of the sector, over the time, the government has undertaken a number of schemes for the establishment of new enterprises and development of existing ones like:
(i) PMEGP (Prime Minister’s Employment Generation Programme),
(ii) CGTMSE (Credit Guarantee Trust Fund for Micro and Small Enterprises)
(iii) CLCSS (Credit Linked Capital Subsidy Scheme) for Technology Upgradation,
(iv) SFURTI (Scheme of Fund for Regeneration of Traditional Industries), and
(v) MSECDP (Micro and Small Enterprises-Cluster Development Programme)
Some of the recent initiatives (Economic Survey 2015–16) undertaken by the government for the promotion and development of the MSMEs, have been as given below:
(i) UAM (Udyog Aadhar Memorandum): The UAM scheme, notified in September 2015, to promote ease of doing business. Under it, entrepreneurs just need to file an online entrepreneurs’ memorandum to get a unique Udyog Aadhaar Number (UAN)—a significant
improvement over the earlier complex and cumbersome procedure.
(ii) Employment Exchange for Industries: To facilitate match making between prospective job seekers and employers an employment exchange for industries was set up in June 2015 (in line with Digital India).
(iii) Framework for Revival and Rehabilitation of MSMEs: Under this (May 2015), banks need to constitute a Committee for Distressed MSMEs to prepare a Corrective Action Plan (CAP) for them.
(iv) ASPIRE (Promoting Innovation and Rural Entrepreneurs): Launched in March 2015 with the objective of setting up a network of technology and incubation centres to accelerate entrepreneurship and promote start-ups for innovation and entrepreneurship in rural and agriculture-based industry.