Economic Environment of Business

Project On

Small and Medium Enterprises

Group Members: Name Amey londhe Pratima Patil Supriya Pawar Shirish Salian Sanjay Vanjari Roll No 87 98 100 108 115

Submitted To:Prof.

Definition of SME
SME is the abbreviation for Small and Medium Enterprises. These enterprises can be rightly called as the backbone of the GDP of India. The SME sector in India is growing at an exceptionally fast rate due to which it is proving to be beneficial to the Indian Economy. Small enterprise:-An enterprise where the investment in plant and machinery [original cost excluding land and building and the items specified by the Ministry of Small Scale Industries] is more than Rs.25 lakh but does not exceed Rs.5 crore. Medium enterprise:- medium enterprise is an enterprise where the investment in plant and machinery [original cost excluding land and building and the items specified by the Ministry of Small Scale Industries] is more than Rs.5 crore but does not exceed Rs.10 crore. The Indian small and medium enterprises (SMEs) sector plays a pivotal role in the country's industrial economy. It is estimated that in value, the sector accounts for about 45 percent of manufacturing output and about 40 percent of total exports. In recent years, the MSE sector has consistently registered a higher growth rate than the overall industrial sector. The major advantage of the MSE sector is its employment potential at a low capital cost. According to available statistics, the sector employs an estimated 59.7 million people in 26.1 million enterprises; labor intensity in the MSE sector is estimated to be nearly four times that of large enterprises.

Major Sectors Of SMEs

Textiles and Paper Service industries

 Automotive components Food and beverages IT Tobacco and Wood/Furniture Pharmaceuticals Electronics Agriculture ET and others

Importance
Simple to organized Employment Generation Innovation and new concepts Low finance Promoting Exports Independent structure Low risk

SMEs Role in India

Economy driver Employment generator

 Sector growth

FIGURES ABOUT SMES

The Indian SME market is worth $5 billion. There are over 11 million SME units in India that produce more than 8,000 products. SME's Contribution towards GDP in 2011 was 17% which is expected to increase at the rate of 22% by 2012. SMEs are the fountain head of several innovations in manufacturing and service sectors, the major link in the supply chain to corporate and the PSUs. By promoting SMEs, the rural areas of India will be developed.

REASON BEHIND SURVIVAL & GROWTH OF SMEs IN INDIAN ECONOMY

Govt. policy, tariff and easy loan with low interest rate for SMES in help to grow these enterprises. Foreign and local fund providers are taking huge interest in the small and medium enterprises of India. Banking sector has also shown a keen interest in lending credit to these enterprises. Recent mergers have taken place in the sector. The sector has significantly contributed towards the domestic production as well as the export earnings. Low investment is required to start and maintain these enterprises. The sector has contributed impressively towards job creation and increase in individual incomes.

 Technological growth is also a factor for growth of SME's in India as there are several trade portals and BUISNESSESS DIRECTORIES available online with huge database of buyers, sellers, manufacturers who are basically back bone of SME's.

Scheme of govt. of india for SMEs

ISO 9000/14001 Certification Fee Reimbursement Scheme Micro & Small Enterprises Cluster Development Programmed Credit Linked Capital Subsidy Scheme Intellectual Property Rights for MSMEs Quality Management Standards/Quality Technology Tools

Facing Problems by SMEs

Financial planning Low production capacity Limited knowledge/ lack of skill labour Ineffective marketing Identification of new market Not adoptability of new technology

Conclusion: What should India adopt from this two country SMEs industry?
1. Increase utilization of installed capacity 2. Increase information, orientation and facilities 3. Specialized training for administrative, local, national and world market, research and development, innovation and education

4. Improve - Management - Accounting - Consulting and supporting services - Primary and industrial education level 5. Improve quality of input output by using more innovative and economic tools in all the level 6. Create awareness about global trade laws 7. Subsidies import and export policy of SMEs 8. Increase the coverage of technology and up gradation fund (TUF) 9. Government should reserve rural market for SMEs and protect them from competition by big industrial houses 10. Facilitate by credit instruments support and lowering down rates for start ups and at the time of economic crises.