By: Bharath.
p
Naveen Moras
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CONTENTS:
I)INTRODUCTION
II)DEFINITION
III) FEATURES
IV)IMPORTANCE OF SME’S
V)PROBLEMS FOR SME”S
VI)SUGGESTIONS TO OVERCOME THE PROBLEMS
VII)CONCLUSION
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INTRODUCTION:
Small and medium enterprises (SMEs ) also
known as small and medium scale enterprises
are the essential part of healthy economy.
The small – scale industry has emerged as the most dynamic sector
of Indian industrial economy accounting for over 55% of the total
value of industrial production.
The growth recorded by SSI in India is 2% more
than any other sector; it accounts for 40% of the
country’s GDP, 35% of Direct exports, 15% of
Indirect Exports (through Merchant Exporters,
Trading Houses & Export Houses) and employs
more than 20 million people
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Definition of Micro, Small and Medium
Enterprises
A micro enterprise is an enterprise where
investment in plant and machinery does
not exceed Rs. 25 lakh
•A small enterprise is an enterprise where
the investment in plant and machinery is
more than Rs. 25 lakh but does not
exceed Rs. 5 crore
•A medium enterprise is an enterprise
where the investment in plant and
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Characteristics of the SMEs
•The growth recorded by SSI in India is 2% more than
any other sector
•The sector accounts for 9% of the country’s GDP
•The sector employs more than 20 million people
(Employment contribution by SMEs in Andhra Pradesh is
7.5%)
•It has been estimated that a lakh rupees of investment
in fixed assets in the small scale sector generates
employment for four persons
•Among the large PSBs, state bank of India’s SMEs
exposure grew by 24% in 2008
•All banks are targeting SMEs credit growth of 25%
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•Public sector banks’ overall credit to SME sector grew
by 26% in 2006-2007, which amounted to Rs.1,85,000
cores
•Reserve Bank of India has advised all commercial banks
to achieve 20% annual growth in SME lending
till 2010
•Non-traditional products constitute a massive 95% of
the SSI exports
•SIDO, SIDBI, NABARD, NSIC, export promotion
authorities are actively involved in the development of
SMEs in India
•45%-50% of the Indian Exports is being contributed by
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ADVANTAGES OF SME’S
More jobs per unit capital
Integrated in to the domestic co.
Rapid growth of large scale co in the long run
Increase d employment
Flexible
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SME’S IN DIFFERENT SECTORS OF INDIAN
INDUSTRY:
Food Processing
Agricultural Inputs
Chemicals & Pharmaceuticals
Engineering; Electricals; Electronics
Electro-medical equipment
Textiles and Garments
Leather and leather goods
Bio-engineering
Sports goods
Plastics products
Computer Software, etc.
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IMPORTANCE OF SMES
Employment
Regional and local development
Contribute significantly to export revenues
A positive effect on the trade balance
Helps LSE’s
Attracts direct foreign investment
Act as engines of growth
It generates more jobs per unit of capital and
is more capital efficient
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Small makes Big Difference
Small industries Contributes 39% of the manufacturing output and
around 33% of the total export of the country
This sector employs an estimated 31 million persons spread over
12.8 million enterprises
The labour intensity in the MSE sector is estimated to be almost 4
times higher than the large enterprises.
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PROBLEMS OF SME’S
Under-utilization of capacity.
Inadequate and untimely credit flows
Inability in technology up gradation
Insufficient raw-material procurement
Inability to market finished goods and
Ineffective monitoring and feedback
mechanism
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SMERA (SME Rating
Agency of India Limited)
India’s first dedicated rating agency for SME segment.
Joint initiative of SIDBI, Dun & Bradstreet and CIBIL
(Credit Information Bureau (India) Limited) along with
leading PSU, Private and foreign Banks.
Rating cost substantially reduced in case of coverage of
eligible SSI units under NSIC (National Small Industries
Corporation) Subsidy Scheme
Already done > than 2350 ratings.
Incentives for SMERA Rating for SIDBI’s Customers
– Nominal Rating fees.
– Reduction in rate of interest by 0.50% p.a. on existing
loans if the customer is rated in the first three grades
– Would facilitate approval of applications for fresh loans
in future
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There is an unprecedented importance of
Small and medium Enterprises in the country.
This is because this sector, contributes a major
amount in the development and employment.
It is a very crucial sector being the
second largest sector after [Link]
recent years the SME sector has
consistently registered higher growth rate
compared to industrial sector.
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