Micro, Small and Medium Enterprises (MSME) sector has amalgamated as a highly vibrant and dynamic sector of the Indian economy over the last five decades. MSMEs not only play a critical role in providing large employment opportunities at comparatively lower capital cost than large industries but also help in the industrialization of rural & backward areas, thereby, reducing regional imbalances, assuring more equitable distribution of national income and wealth. MSMEs are complementary to big industries as ancillary units and this sector contributes enormously to the socio-economic development of the country.
Ministry of Micro, Small & Medium Enterprises (M/o MSME) envision a vibrant MSME region by encouraging growth and development of the MSME Sector, including Khadi, Village and Coir Industries, in cooperation with related Ministries/Departments, State Governments and other Stakeholders, through providing support to existing enterprises and encouraging creation of new enterprises.
The Micro; Small and Medium Enterprises Development (MSMED) Act was launched in 2006 to address policy issues affecting MSMEs as well as the coverage and investment ceiling of the sector. The Act requires to facilitate the development of these enterprises as also enhance their competitiveness.
It gives the first-ever legal framework for recognition of the concept of “enterprise” which comprises both manufacturing and service entities. It says that medium enterprises for the first time and seeks to integrate the three tiers of these enterprises, namely, micro, small and medium. The Act also gives for a statutory consultative mechanism at the national level with balanced representation of all sections of stakeholders, particularly the three classes of enterprises; and with a vast range of advisory functions.
Establishment of specific funds for the promotion, development and improving competitiveness of these enterprises, notification of schemes/programmes for this reason, progressive credit policies and practices, preference in Government purchasing power to products and services of the micro and small enterprises, more effective mechanisms for mitigating the problems of delayed payments to micro and small enterprises and assurance of a scheme for easing the closure of business by these enterprises are some of the other features of the Act.
On 9 May 2007, subsequent to a change of the Government of India (Allocation of Business) Rules, 1961, erstwhile Ministry of Small Scale Industries and the Ministry of Agro and Rural Industries were merged to form the Ministry of Micro, Small and Medium Enterprises (M/o MSME). This Ministry now laid out policies and promotes/ facilitates programmes, projects, and schemes and monitors their implementation with a view to assisting MSMEs and help them to scale up.
The Micro, Small and Medium Enterprises- Development Organisation (MSME-DO) is led by the Additional Secretary & Development Commissioner (MSME). The Office of the Development Commissioner (Micro, Small & Medium Enterprises) helps the Ministry in formulating, coordinating, implementing and monitoring different policies and programmes for the promotion and development of MSMEs in the country. The M/o MSME is bifurcated into two Divisions called Small & Medium Enterprises (SME) Division and Agro & Rural Industry (ARI) Division. The SME Division is given the work, inter- alia, of administration, vigilance and administrative supervision of the National Small Industries Corporation (NSIC) Ltd., a public sector enterprise and the three autonomous national level entrepreneurship development/training originations.