Micro and Small Enterprises in India: The Era of Reforms
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Your Account Logout. Micro and Small Enterprises in India. Edited By Keshab Das. Edition 1st Edition. First Published Imprint Routledge India.
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By Keshab Das. View abstract. This policy statement proposed some path- breaking measures to mitigate the handicaps that were faced up by small enterprises in respect. Government of India introduced a large number of innovative promotional measures to uplift the growth of small scale sector.
A small enterprise is where the investment in plant and machinery is more than twenty five lakh rupees but does not exceed five crore rupees.
A medium enterprise is where the investment in plant and machinery is more than five crore rupees but does not exceed ten crore rupees. In the case of the enterprises engaged in providing or rendering of services, a micro enterprise is where the investment in equipment does not exceed ten lakh rupees. A small enterprise is where the investment in equipment is more than ten lakh rupees but does not exceed two crore rupees.
A medium enterprise is where the investment in equipment is more than two crore rupees but does not exceed five crore rupees. For the purpose of calculation we have used Annual Average Growth Rate. Because of globalization and liberalization an environment favorable to heavy Foreign Direct Investment is built up in the country posing a danger to the small scale sector of the country.
The formation of WTO has also scaled down the restrictions of imports for its member countries including India. All these have exposed the SSI sector to globalization to which India does not seem yet to be ready. The researcher has used key variables like number of units, production , employment and exports to study the impact of globalization. The study found that the rate of growth was high in the pre- liberalization period compared to the post-liberalization period.
Finally researcher concludes that India would have to make itself ready to face globalization. Though globalization initially weakens the SSIs but once the enterprises get immune and ready to globalisation the same thing would reap benefits, the only thing to be done is to upgrade ourselves and work hard to put ourselves to ultimate level. For this purpose, the performance of the SSI sector was examined in depth on the basis of different parameters such as number of units, production, employment and exports.
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Though the numbers in all the above parameters has increased but the Annual Average Growth Rate AAGR has decreased to a great extent in post —liberalisation period compared to the pre-liberalization period. Researchers highlighted that overall impact of globalization on small scale sector was negative which is a serious matter of concern for the planners.
SSI sector produces almost everything from traditional to state of the art articles and provides employment to almost all the sections of the society increasing national income. The study showed that though the growth rate has retarded to some extent in the post liberalization period compared to the pre liberalization period, the contribution of the SSI sector is immense and unignorable.
The researcher concludes that the schemes for the upliftment of SSIs fail to a certain extent because of lack of awareness and lack of accessibility factor. Looking at the vibrancy of the sector planners must plan better accessible plans to make the sector more productive. The study was conducted in Punjab. The study revealed that SSIs were affected in the liberalized era and were finding a lot of problems to run their businesses.
Some units also believed that globalization had also opened new opportunities for them. The main reason for difficulties was lack of infrastructure and operation facilities in comparison with large, medium and foreign companies. Other reasons for difficulties were lack of clear marketing policies, financial limitations, lack of international quality certification, lack of advertising, financial and operational difficulties and technological obsolescence. It was suggested in the study to the Govt. RAJAN K The researcher has made an attempt to examine the performance of small scale industries with an emphasis on pre-reform and post-reform periods.
The performance was analysed in terms of number of units, production, employment and exports. The analysis showed that performance of SSIs in terms all the above indicators was better in the pre-reform period in comparison to the post-reform period. The major reasons for this indicated in the research were stiff competition faced by the SSIs during the post reform period owing to the withdrawal of special concessions like reservation of items, exemption from excise duties and withdrawal of protection granted to the sector due to the liberalization, privatization and globalization LPG policies.
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The paper indicates the need for granting special care to accelerate the performance of this sector in generating employment, increasing production and increasing exports. Globalisation in India Globalization refers to the process of integration of the world into one huge market. It provides several things to several people with removal of all trade barriers among countries. The real thrust to the globalization process was provided by the new economic policy introduced by the Government of India in July at the behest of the IMF and the World Bank.
The small scale sector is a vital constituent of overall industrial sector of the country Sonia and Kansal India to drastically scale down the quantitative and non-quantitative restrictions on imports. The small scale industry thus confronted globalization since because of above reasons. Friend- because both globalization and small scale industries are the two wheels of the vehicle of economic growth and prosperity; globalization is said to bring in new opportunities of business , bring in new technology and capital and generate employment and increase the national income.
Foe- because some argue that given the developing nation that India is, Small Scale Industries SSIs can suffer and strangulate to death by the fierce competition put up by globalization, the large scale industries and foreign firms can perish the small industries by their economies of scale and large scale networking. This sector contributes 8 percent of the country GDP, 45 percent of the manufactured output and 40 percent of its exports.
The sector is estimated to employ about lakh persons in over lakh enterprises throughout the country. Further, this sector has consistently registered a higher growth rate than the rest of the industrial sector. There are over products ranging from traditional to high-tech items, which are being manufactured by the MSMEs in India. It is well known that the MSMEs provide good opportunities for both self employment and wage employment. India is developing country and hence it is extreme need to have source of livelihood.
Since MSME it is labour intensive in character helps immensely in job creations. Above data shows a positive and phenomenal growth in MSME sector. SSI Sector in India creates largest employment opportunities for the Indian populace, next only to agriculture. Small Enterprises play a very significant role in terms of balanced and sustainable growth of the economy by way of employment generation, development of entrepreneurial skills and contribution to export earnings.
Since independence, the small scale industries have rendered a major contribution to the gross domestic product of the country. They play a vital role in changing the industrial scenario and strengthening the industrial sector tremendously. They assist the utilization of assets for productive purposes with minimal initial resources.
If we have closer look about the export performance of the MSME it is found that this sector plays a major role in India's present export performance. Hence such exercise helps in said country gross domestic product too. Performance of MSMEs has been compared in terms of number of units, in terms of employment, in terms of production and in terms of exports in the pre and post globalization periods.
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Analysis of the same has also been given below it. Annual Average Growth Rate or Exponential Rate has been used as the criteria for comparison between pre and post globalization periods. Pre globalization period is said to be from to and post globalization period is said from to This shows that although the number of units have increased but the Annual Average Growth Rate i. Although the production has increased in crores of rupees but the annual average growth rate has decreased.
The production was increasing the post liberalized period but the average and the yearly growth rate was higher in pre-liberalised period compared to the post-liberalised period. MSMEs prove to be a boon for a country like India which can produce maximum labour opportunities with the least of capital. Performance of the MSMEs in the pre and post liberalization periods shall be assessed by the following data.