SRJIS/BIMONTHLY/ SHRUTIKA MUKHIJA, PROF. DIVYA MUNJAL & DR. R. K. SANT (5288-5301)
MSME SCHEMES: INITIATIVES AND DEVELOPMENT BY THE GOVERNMENT Shrutika Mukhija1, Prof.Divya Munjal2 & R.K.Sant3, Ph. D. 1
Asst. Prof Commerce Commerce Dept.N.B.G.S.M. College M.D. University 2
Asstt. Prof. N.B.G.S.M. College M.D. University 3 Associate Professor, Delhi University Abstract
Our Hon’ble Prime Minister Shri Narendra Modi had a view to various actions plans with recommendation to ensure inclusive growth with efficiency of social and economic sector of our country. Transformation leads to a few of the initiatives, implemented by creating a moment for change. The overall progress is concentrated to achieve targets with a broader vision, for faster and equitable growth. Various groups had been created to accelerate growth through infrastructure, enhance inclusion by rural electrification to promote entrepreneurship to national schedule caste and schedule tribe hub. To improve equity, to increase employment, enhance skillful labour initiate quality education, technology advancement; strengthen agriculture sector and way forward. Niti ayog monitor the implementation and growth of ideas in particular sector. The institution will serve as think tank of the government, and to create a vision for transforming change indigenously designed and collaborated to develop new processes with domestic integration.In this paper we will outline the features of mini, small, medium entrepreneurship sector with economic and social development of our country. The transformation through various schemes, which are implemented by ministry of MSME and Challenges and opportunities faced by MSME in current scenario. Keywords: Msme, Schemes, Initiatives, Development Scholarly Research Journal's is licensed Based on a work at www.srjis.com
INTRODUCTION With the growth process of Indian economy since independence in spite of stiff competition from the large scale sector, SSI has been playing a significant role in socio-economic development of India. Small scale sector occupy an important place in Indian economy. Central and state government bring various incentive scheme for small scale industries related with providing interest free loan, tax concessions etc. Incentives can be in monetary and non monetary terms both. SSIs account for 95% industrial unit, contributing up to 40% of GDP and 45% of the total export. After agriculture, SSIs are the second largest employer of human resource. Small business firms can quickly react to changes in the environment; they have ability to producing new product and use new methods and ideas. There are many MAY-JUNE 2017, VOL- 4/31
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factors which are responsible for development of SSI. Any individual can start a small business with limited resources if he had entrepreneurial spirit. The government of India has created two separate ministries, viz., ministry of small scale industries and ministry of rural and agro industries. The ministry of small scale industries formulates policies, programmes and schemes for the growth and promotion of small scale industries. Ministry of agro and rural industry is the nodal agency for development and coordination of village and khadi industries, tiny and micro enterprise in both rural and urban areas. Micro, small and medium entrepreneurship and its organizations compliments the states of India with their efforts. It also encourages entrepreneurship. MSME is also the backbone of Indian manufacturing sector and Innovation is the key word for MSME as different schemes are launched autonomously by the concerned government to abolish old procedure and techniques and adopt innovation which led to transformation in MSME sector. It is necessary to support MSME by educating, and empowering them for optimum utilization of the resources both human and economic to achieve the desired goals. Both socio-economic developments enhance the MSME sector in most states with innovation and major transformation. OBJECTIVES OF THE STUDY a) To study the need of importance of MSME b) To outline the recent initiatives under the ministry of MSME c) To focus on major plans schemes implemented by the ministry for MSME d) To review the challenges to be faced by MSMEs in India e) To evaluate the opportunities for MSME in India RESEARCH METHODOLOGY
The descriptive methodology has been used to collect data
Secondary data has been collected from various published sources and websites.
The explanation of the data is more qualitative than on quantitative terms.
MSME SECTOR For the promotion, development and enhancing the competitiveness of micro small and medium enterprise the act come into existence named MSME development act 2006. The MSMED act 2006 defines its investment in plant and machinery for manufacturing enterprise and service enterprise. For the purpose of supporting the growth of small scale sector, government has created various institutions which will provide various assistance to small scale industries. These institutions are broadly classified as All India Institutions, State Level Institutions and Grass-Root Level Institutions which will provide help regarding formation of
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policies, training, development, marketing, selection of plant and machinery, reservation of product technology assistance, export and import subsidies etc. these institutes encourage SSI units to compete in market and also helps in secure reservation of certain products to be manufactured only by small scale sector. Subsidies and incentives are very helpful in development of more new entrepreneur which leads to entrepreneurial development and encouragement to establish industries in backward areas of the country. Government can bring industrial development uniformly in all regions of the country. CLASSIFICATION OF MSME SECTOR Sector
Manufacturing enterprise Service enterprise (investment limits in plant (investment limit in and machinery) equipment)
Micro Small Medium
Up to 25 lakh 25lakh-5 crore 5-10 crore
Up to 10 lakh 10 lakh-2 crore 2-5 crore
SOURCE: MSME development act 2006 The ministry of MSME promotes the development of these enterprises with the objective of creating self employment and upgrading the skills of existing and potential entrepreneur. For encouraging young entrepreneur going into new ventures, various subsidies and incentives are provided by central and state government, so that MSME sector will grow. ANNUAL GROWTH RATE ON PRECEDING YEARS (ii)
SOURCE: MSME ANNUAL REPORT 2015-16 SCHEMES OFFERED BY CENTRAL GOVERNMENT FOR MSME SECTOR
Marketing Assistance Scheme
Performance and credit rating scheme
International Cooperation (IC) Scheme
Assistance to Training Institutions Scheme
Survey, Studies and Policy Research
Schemes for Khadi & Village Industries Sector
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Scheme of fund for Regeneration of Traditional Industries (SFURTI)
Market Promotion and Development Assistance (MPDA)
MARKETING ASSISTANCE SCHEME Marketing is the most important factor for the success of any enterprise and it is very important for small scale sector. For this, central and state government has been provided various marketing scheme to increasing marketing capabilities and competiveness. MSMED ACT 2006 adreessess issuses relating to credit, marketing, technology upgradation etc concerning the micro, small and medium enterprises. Objective of the scheme
To enrich the marketing skills of the micro, small and medium entrepreneur
To compete or provide platform to MSMEs for interaction with large buyers
To showcase the competencies of MSMEs
To enhance marketing capabilities and competitiveness
Financial performance of the scheme (in rs.crore) BUDGET 2014-15 14.00
EXPENDITURE 2014-15 11.68
BUDGET 2015-16 14.00
PERFORMANCE AND CREDIT RATING SCHEME A scheme for micro and small enterprise was highlited in union budget 2004 -05 and this scheme provided credit loan at attractive interest rates. This scheme is implemented with the help of national small industries cooperation ltd (NSIC). The main objective of the scheme is to provide a trusted third party opinion on the capabilities and credit worthiness of MSEs so as to create awareness amonst them about the stenth and weekness of their existing operation, this scheme is implemented through empaneled rating agencies i.e. CRESIL, CARE, SMERA, ICRA, ONICRA. Advantages of performance and credit rating scheme
Credit availability at attracting interest rates
Global trade improved
First year fee is subsidized
Financial performance of the scheme (in rs. Crore) BUDGET 2014-15 90.00
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EXPENDITURE 2014-15 88.00/23048 UNITS
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BUDGET 2015-16 28.00/12842 UNITS
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INTERNATIONAL COOPERATIVE SCHEME The msme international cooperative scheme provide financial assistance of upto 95% of air rent and space rent for entrepreneurs. It also provides expenses of delegation like frieght and insurance, local transport, communication services etc. the following entities can apply and obtain assistance under ICS(international cooperative schemes).
Central/state government
Industry/enterprise association
Registered socities/trust
Organisation associated with the promotion and development of MSMEs
Financial performance of the scheme (in rs. Crore) BUDGET 2014-15 5.00
EXPENDITURE 2014-15 3.94
BUDGET 2015-16 4.00
ASSISTANCE TO TRAINING INSTITUTE SCHEMES The MSME training institution schemes provide financial assistance for the establishment of new institutions (EDIs), strenthning the infrastructure of existing (EDI) and for supporting entrepreneurship and skill development activities. The assistance shall be provided to these training institutions for creation/strengthening of infrastructure and programme support for conducting entrepreneurship development and skill development programme in the form of capital grant. Maximum assistance for stenthening or creation of infrastructure will be rs 150 lakhs on matching basis, not exceeding 50% of the project cost. The following entities can apply and obtain assistance under TIS(training institution scheme) State/union territory government Training institutions Non government organisations & other development agencies Financial performance of the scheme (in rs. Crore) BUGDET 2014-15 87.00
EXPENDITURE 2014-15 86.25
BUGDET 2015-16 80.00
SURVEY, STUDY AND POLICY RESEARCH The objective of this scheme is to regularly periodically collect relevent and reliable data , from primary, secondary and other sources on various aspects and features of micro, small and medium enterprise(MSME) engaged in manufacturing and services as a composite group or specific segments thereof. It is also study and analyse on the basis of emparical data or MAY-JUNE 2017, VOL- 4/31
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otherwise, the constraints and challenges faced by MSME as well as the opportunities available to them, in the context of liberalisation and globalisation of the economy. The result of these surveys and analytical studies is used for policy reserch and designing appropriate strategies and measures of intervention by the government. Financial performance of the scheme (in rs. Crore) BUDGET 2014-15 1.00
EXPENDITURE 2014-15 0.54
BUDGET 2015-16 2.28
SCHEME FOR KHADI & VILLAGE INDUSTRIES SECTOR Primeminister employment generation programme is a credit linked subsidy scheme of the ministry, implemented by DICs, KVIC and state KVI board with KVIC as a nodal agency at the national level for setting up new self employment projects to create employment opportunities in rural as well as urban areas of the country. Any individual above 18 yrs of age can take the benefit of this programme, objective of this scheme is to bring widely disperesed
traditional artisians, rural and urban unemolyed youth and give them self
employment opportunities to the extent possible. Under this scheme financial assistance is provided for setting up of micro enterprise costing upto Rs.25 lakhs in manufacturing sector and 10 lakhs in service sector. Assistance under the scheme is available only for new projects specifically under the PMEGP. Financial assistance under this programme BUDGET 2014-15 1108.06
(in rs. Crore)
EXPENDITURE 2014-15 1063.04
BUDGET 2015-16 1050
SCHEME OF FUND FOR REGENERATION OF TRADITIONAL INDUSTRIES(SFURTI) It is a scheme of fund for regeneration of traditional industries. The objective of this scheme is to make traditional industries more competitive with more productivity, profit and sustanable employment for traditional industry, artisans and rural entrepreneur. It build up innovated and traditional skills, improved technology, advance processes, market intelligence and new model of public- private partnership. The motive of this scheme is to develop clusters of traditional industries in various parts of the country over a period of five years commencing 2005-06. Cluster development scheme is launched for the holistic development of selected MSE cluster development programme through value chain and supply chain management on co-operative basis.
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MICRO AND SMALL ENTERPRISES CLUSTER DEVELOPMENT PROGRAMME (MSE-CDP) (iii) 1 BUDGET ESTIMATES 100.00 crore 2015-16 FINANCIAL PROGRESS 2 DURING 2015-16 (UPTO 31 52.21crore DEC 2015) 3 TILL NOW (SINCE 318.00 crore SINCE 2007-08 INCEPTION) PHYSICAL ACHIEVMENTS 4 DURING 2015-16( UPTO DIAGNOSTIC STUDY 31-12-2015) REPORT-15(3312 BENEFICIARY UNITS) SOFT INTERVENTION-9(869 BENEFICIARY UNITS) COMMON FACILITY CENTERS-7(14800 BENEFICIARY UNITS) INFRASTRUCTURE DEVELOPMENT CENTRE-6 5 TILL NOW (SINCE CLUSTER TAKEN-996 INCEPTION) ID CENTERS-171 INFRASTRUCTURE DEVELOPMENT CENTERS
Financial performance of the scheme (in rs.Crore) BUDGET 2014-15 10.00
EXPENDITURE 2014-15 00
BUDGET 2015-16 50.00
MARKET PROMOTION AND DEVELOPMENT ASSISTANCE This scheme is formulated as a unified scheme by merging different schemes/sub schemes/components of different heads implemented in the 11th plan, namely market development assistance, market and market promotion and publicity. Market promotion and development assistance scheme has been modified by the MDA scheme of KVIC. Government has introduced w.e.f.01.04.2010, a flexible, growth and for artisan oriented market development assistance scheme (MDA SCHEME), in place of the erstwhile system of rebate. MDA provide institutions flexibility to use the assistance for products, production process and outlets improvements, besides giving incentives to customer. MDA shall be allowed @ 20% on cost of production of khadi and polyvastra to the extent of production target approved by the standing finance committee (SFC) of KVIC for the year. The components of the scheme are:
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The Modified MDA shall be at 30% of the prime cost and shall be distributed amongst producing institutions(20%), selling institutions (40%) and articians (40%) and prize would be delinked from the cost chart and product can be sold at marketlinked prize at all stages of production.
KVIC undertake publicity (currently under the village industry grant) of schemes and products of the sector.
Market promotion & infrastructure is the new component of the scheme would encompass establishment of marketing complexes/plazas(EMCP) with an outlay of Rs.60 crore and the maximum assistance per project will be limited to Rs.10 crore.
Under MPDA scheme assistance would be provided to the eligible KVIs for participation in international tradefair/ exhibitions held in foreign countries in order to showcase KVIs industry products to foreign countries, access international seller and buyers and forge business alliance etc.
Financial performance of the scheme (in rs.Crore) BUDGET 2014-15 201.83
EXPENDITURE 2014-15 196.94
BUDGET 2015-16 178.00
EXPENDITURE 2015-16 156.24
RECENTS INITIATIVES OF THE MINISTRY
NEW INITIATIVE UNDER PMEGP
COIR UDYAMI YOGNA (CUY ) & COIR VIKAS YOJNA
TECHNOLOGY CENTRE SYSTEM PROGRAMME
UDYOG ADHAR MEMORANDUM
QUALITY MANAGEMENT SYSTEM(ISO) IN MINISTRY OF MSME,KVIC AND COIR BOARD
PRIME MINISTER EMPLOYMENT GENERATION PROGRAMME This scheme is implemented by khadi and village industry commission as nodal agency at national level and state level the government subsidy under the scheme is routed by KVIC through the identified banks for eventual distribution to the entrepreneur in their bank accounts. The cost of the project is not more than 25 lakhs and business/services sector is not more than 10 lakh. Any individual above 18 years of age and the eligible qualification at least 8th standard pass for projects costing more 10 lakh in manufacturing sector and more than 5 lakh in business. Following activities have now been allowed under PMEGP MAY-JUNE 2017, VOL- 4/31
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All urban and rural transport activities
Industries of processing of pasmina wool and other products like hand spinning and hand weaving
Value added for tea, coffee and rubber etc.
Now E-tracking of PMEGP application has been introduced to bring transperancy in implementation of PMEGP scheme and for PMEGP beneficiaries.
EMPLOYMENT GENERATION IN MSME SECTOR UNDER PMEGP FOR 2015-16 (iv) S. STATE/UTs NO
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
MARGIN MONEY SUBSIDY UTILIZE D(Rs.lakh)
NUMBE R OF PROJEC TS ASSIST ED
JAMMU & 3506.8 KASHMIR HIMACHAL 1912.88 PRADESH PUNJAB 3506.8
186.11
270
ESTIMATE D EMPLOYM ENT GENERAT ED (NO. OF PERSONS) 1209
72
38
214
494.35
132
937
CHANDIGAR H UTTRAKHAN D HARYANA DELHI RAJASTHAN UTTAR PRADESH BIHAR SIKKIM ARUNACHA L PRADESH NAGALAND MANIPUR MIZORAM TRIPURA MEGHALAY A ASSAM WEST BENGAL JHARKHAND
100
10.85
2
63
2072.2
232.92
158
869
3347.4 1753.4 5260.43 11955
673.42 22.77 640.49 2175.01
270 19 328 710
1042 152 2661 6930
6057.2 454.77 1932.77
246.74 0 0
95 0 0
0 0 0
1250.62 1023.23 909.6 909.54 1250.62
385.44 0 0 0 0
122 0 0 0 0
579 0 0 0 0
3069.86 3188
0 508.63
0 321
0 2674
3825.6
701.92
328
2624
ORISSA CHHATTISG ARH
4782 4303.8
776.64 582.4
464 208
2481 416
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MARGIN MONEY SUBSIDY RELEASE D(Rs.-lakh)
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MADHYA PRADESH GUJRAT MAHARAST RA ANDHRA PRADESH TELANGANA KARNATAK A GOA LAKSHDWEE P KERALA
8129.4
651.44
162
1325
5260.2 5738.4
1497.43 862.54
316 406
2912 3336
2072.28
373.07
90
1280
1594 4782
173.31 1389.32
44 484
606 3173
318.82 100
0 0
0 0
0 0
2231.6
1009.02
466
2261
TAMIL NADU PUDUCHERR Y ANDAMAN & NICOBAR ISLANDS ALL INDIA
5100.8
775.95
357
3014
100
0
0
0
100
33.1
61
157
101900
14474.87
5851
40915
COIR UDHAMI YOGNA (CUY) & COIR VIKAS YOGNA (CVY) This is a credit linked subsidy scheme for setting up of coir units with project cost upto 10 lakhs plus one cycle of working capital which shall not more than 25% of project cost. Working capital will not be considered for subsidy. Nature of assistance
Benefiaries contribution should be 5% of the project cost
Bank credit rate for this scheme is 55%
Rate of subsidy will be 40% of the project
Who can apply under the scheme? Individual, companies, self help group, NGOs, institutions registered under society registration act 1800, production cooperative societies, joint liabilities group and charitable trust can apply for this scheme. SCHEME
BUDGET 2014-15 COIR VIKAS 29.30 YOJNA COIR 7.30 UDYAMI YOGNA
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EXPENDITURE 2014-15 29.28
BUDGET 2015-16 26.37
4.00
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TECHNOLOGY CENTRE SYSTEM PROGRAMME Government of India has approved to upgrade and export the network of MSME. Under TCSP scheme 18 new technology centres (tool rooms) would be setup and upgraded known as tool rooms (10 nos) and technology development centre (8 nos) spread across the country. These centre’s main objective to support industries particularly MSME’s in the country by offering opportunities to skilling manpower for technical and skill development to the youth at various levels and providing technical and business advisory support to MSME entrepreneur. The scheme aim to facilitate technology up gradation for MSME by providing 15% capital subsidy (12% prior to2005) on institutional finance available to them for induction of well established and improved technology up gradation in approved subsectors/products. Objectives of TCSP
Improve manufacturing technology
To increase the manufacturing competitiveness of MSME’s in India
Increase business opportunities for MSME through new market linkages
Provide interactive platform for industry-academia-institutions
Facilitate closer cooperation amongst skill development and labour market stakeholders
Establish closer cooperation of key innovation stakeholders
TECHNOLOGY AND QUALITY UPGRADATION SUPPORT TO MSME (v) BUDGET ESTIMATES 2015-16 FINANCIAL PROGRESS DURING 2015-16(UPTO 31-12-2015) TILL NOW (SINCE INCEPTION) PHYSICAL ACHIEVMENT DURING 2015-16 (UPTO 31-12-2015)
TILL NOW(SINCE INCEPTION)
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20.00 crore 10.66 crore 27.21 crore SINCE 2010-11 MSME ASSISTED FOR EET -105 UNITS ASSISTED FOR PRODUCT CERTIFICATION- 70 AWARENESS PROGRAMME CONDUCTED-25 (APPROX UNIT BENEFITED 500) MSME ASSISTED FOR EET-229 UNITS ASSISTED FOR PRODUCT CERTIFICATION-1070 AWARENESS PROGRAMME CONDUCTED-202 (APPROX UNIT BENEFITED 4500)
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UDYOG AADHAAR Udyog adhar is a 12 digit registration number issued by the ministry of micro, small and medium enterprise (MSME) to the existing or new small and medium enterprisers in the country who have applied for registration. This initiative of having the one page udyog adhar memorandum (UAM) has come into effect on 18 sept 2015. The introduction of such online users friendly form has definitely reduce the time taken and efforts made in the entire process of applying and verification of the document for the MSME registration. The simplified one page registration form “udyog aadhar” was made after consultation with the states and stakeholders, on recommendation made by the kamath committee and observation/approvals by department related parliamentary standing committee, national board and advisory committee etc. this is in line with prime minister’s announcement with regard to dispensing with requirements of attestation of documents to be replaced with self-attestation of documents. Salient features of udyog adhar
Registration is online instead of personal filling. It is just a click job
UAM can be filled by self declaration on the detail of the enterprise
The details required for filling for registration: personal adhaar no, industry name, address, bank details and some common information.
One can file more than one udyog aadhaar with same aadhaar number.
No fees for filling
Once filled and uploaded, the registration number is received in the mail-Id provided.
QUALITY MANAGEMENT SYSTEM (ISO) IN MINISTRY OF MSME, KVIC AND COIR BOARD Quality management system scheme is to sensitize and encourage MSEs to adopt latest QMS and QTT and to keep a watch on sectoral developments by undertaking the stated actives. The ministry of micro, small and medium enterprise have been awarded ISO 9001: 2008 certification, development of micro, small and medium enterprise and demonstrating the ministries’, mission of promoting the growth with dedication and commitment. Objective of the scheme
Improvement in product quality
Reduction in rejection and re-work in the course of manufacturing
Optimum utilization of resources
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Reduction in building up inventory at the various stages in the form of raw-material, work in process, finished product etc...
OPPORTUNITIES IN MSMEs
LESS CAPITAL INTENSIVE
PROVIDE 50% PRIVATE SECTOR EMPLOYMENT
EFFECTIVE
TOOL
FOR
PROMOTION
OF
BALANCED
REGIONAL
DEVELOPMENT
SUPPORTED AND PROMOTED BY GOVERNMENT
GOVERNMENT PROVIDE SUBSIDIES AND FINANCE
TRADE FAIRS AND EXIBITIONS ARE ORGANISED FOR ECONOMIC GROWTH
POCUREMENT OF RAW MATERIAL AND MACHINERY
PRODUCED GOODS ARE PURCHASED BY GOVERNMENT
PROVIDE 40% PRODUCED GOODS ARE FOR EXPORT
CHALLENGES FACED BY MSMEs MSME is an engine for the growth of country economy. It play a pivotal role in the socioeconomic development of India, but not get sufficient support from the concerned government departments, banks or any other sources, so it face number of problems
Absence of adequate and timely banking finance
Limited capital and knowledge, non availability of suitable technology
Low production capacity
High cost of credit
Inefficient access to global markets
Ineffective market strategy
Lack of skilled manpower for manufacturing services, marketing strategy etc.
Inadequate infrastructure facilities, including power, water, roads etc
Problem of storage, designing, packing and product display
Constraints on modernization of expansion
CONCLUSION Ministry of MSME sector envision vibrant MSMEs. Government takes various steps to promote growth and development of MSME sector. Government introduced various schemes which will provide support for technology up gradation & modernization in integral infrastructure facilities, welfare of articians and workers of MSME. The main objective of the MAY-JUNE 2017, VOL- 4/31
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scheme is performance and credit rating which will provide employment and create awareness about the strength and weakness of their existing operation. Marketing assistance scheme which will provide a platform for interaction with the individual/institutional buyers for marketing competiveness of MSMEs. Government also start prime minister employment generation programs me (PMEGP). E-office initiative has been introduced to achieve paperless office in the ministry. Government of India has adopted the cluster development approach as a key strategy for enhancing the productivity and competitiveness as well as capacity building of micro & small enterprises and their collectives in the country. A technology vibrant and employment generation in traditionally competitive small & medium industry should be encouraged and established as a strong pillar for different sections of the economy and make a sustainable contribution to national income, employment and export. In order to prevent MSME sector new approaches should be introduced in association to Indian economy. REFERENCES MSME annual report,(2015-16) MSME development act,(2006) FICCI Report, (2011). MSMEs vision 2020, By Grant Thornton. ASSCOCHAM Report, (2011). SMEs have to be (SMEs) Smart Money Enterprise Government of India (2009). India Vision 2020. Planning Commission, India. Government of India (2011). Industrial Policy and Promotion. Karve Report, 10(3), Ministry of Commerce and Industry. Bodla, B. S. and Verma, S. R. (2008). An analysis of the performance of SSIs in the era of globalization. Menon, R. (2005). Film on micro credit, to their credit .Produced by The Energy and Resources Institute, Financed by The Swiss Agency for Development and Corporation. Rahman, A. (1999). Micro-credit Initiatives for Equitable and Sustainable Development Ruchismita, R and Gupta, P (2005). An Approach paper for the Delivery of Comprehensive Financial Services to the Informal and Unorganized Sector. Source: ICICISocialinitiatives.org.
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