Medium Small and Micro Enterprises (MSMEs) play a vital role in the industrial development of a nation. A MSME is crucial for gratifying various socio-economic objectives, such as higher growth of employment, output, promotion of exports, besides being an instrument for alleviating regional disparities and fostering entrepreneurship. Indian MSMEs have been exposed to intense competition due to the accelerated process of globalization and this increment would provide better capital and help the firms in facing adverse market competition. The government has hiked the investment cap in MSMEs after a gap of five years by revising investment limits for classification of industries. This signifies a significant step for MSMEs because interest rates and costs have been rising consistently due to the ever-increasing inflation. The investment cap is also likely to be linked to inflation so that the industry does not have to depend on periodic revisions and they can scale up, as and when required.
As recently reported by The Times of India, currently any unit in the manufacturing industry with an investment between Rs 25 lakh and Rs 5 crore is classified as a small enterprise, while units with an investment of Rs 5 – 10 crore are classified as medium enterprises. In case of services, the limits are lower, given the lower capital requirement in the sector. Earlier the small scale industry was not clearly charted out but now with the changed investment cap, the government has defined the micro and medium industries. This major hike will affect 2.6 crore micro, small and medium enterprises and will improve the credit flow to the sector.
This should be a fruitful decision because it would give a boost to the economy of the nation and the profits of the MSMEs. It would affect development and growth rate as it would employ six crore workers. This would significantly raise the manufacturing output by 45% and there would be an increase of 40% in exports to other countries. On the whole, this review would have an incredible impact on 2.6 crore micro, small and medium industries.
This plan is still in the pipeline as the government would consult the MSMEs before taking a final decision. Nevertheless, the investment hike would be a big thing as this would affect the country’s development. While the earlier mandate requires the government to procure 20% from MSME units, it is now going to change. Earlier, multi-brand retail chains were required to source 30% from MSMEs; this plan too has been put on hold.
The sector would wait to hear on what is going to be the future for MSME units who are continuously struggling with bad credit, poor facilities and lack of government support.
As recently reported by The Times of India, currently any unit in the manufacturing industry with an investment between Rs 25 lakh and Rs 5 crore is classified as a small enterprise, while units with an investment of Rs 5 – 10 crore are classified as medium enterprises. In case of services, the limits are lower, given the lower capital requirement in the sector. Earlier the small scale industry was not clearly charted out but now with the changed investment cap, the government has defined the micro and medium industries. This major hike will affect 2.6 crore micro, small and medium enterprises and will improve the credit flow to the sector.
This should be a fruitful decision because it would give a boost to the economy of the nation and the profits of the MSMEs. It would affect development and growth rate as it would employ six crore workers. This would significantly raise the manufacturing output by 45% and there would be an increase of 40% in exports to other countries. On the whole, this review would have an incredible impact on 2.6 crore micro, small and medium industries.
This plan is still in the pipeline as the government would consult the MSMEs before taking a final decision. Nevertheless, the investment hike would be a big thing as this would affect the country’s development. While the earlier mandate requires the government to procure 20% from MSME units, it is now going to change. Earlier, multi-brand retail chains were required to source 30% from MSMEs; this plan too has been put on hold.
The sector would wait to hear on what is going to be the future for MSME units who are continuously struggling with bad credit, poor facilities and lack of government support.
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