MSME is the backbone of the Indian economy
MSME is the backbone of the Indian economy
Many factors contribute to the growth of the country’s economy. One of the important factors for India’s economy is Micro, Small, and Medium Enterprises (MSMEs). MSME is the backbone of the Indian economy. This particular sector is considered to be the backbone of the country’s economy as it is vital for achieving inclusive and sustainable development.
MSME is the backbone of the Indian economy, know why
Many factors contribute to the growth of the country’s economy. One of the important factors for India’s economy is Micro, Small, and Medium Enterprises (MSMEs). This particular sector is considered to be the backbone of the country’s economy as it is vital for achieving inclusive and sustainable development.
MSME is also considered a nursery for innovation and enterprises. A large number of jobs also emerge from this sector. The MSME sector comprises 3.60 crore units. More than 8.00 crore people get employment in this sector.
MSMS sector plays a vital role in the growth of GDP
This sector is known to produce more than 6000 products and contributes around 8 percent to the GDP. Apart from this, it contributes about 45 percent of the total manufacturing output and 40 percent of India’s exports. These facts should understand why MSME is so important for the growth of the Indian economy.
Definition of MSME-MSME is the backbone of the Indian economy
Finance Minister Nirmala Sitharaman announced a new definition of MSME last month while holding a press conference to give information about the Atmanirbhar Bharat Abhiyan. As per the provisions of the MSME Act of 2006, MSMEs are divided into two categories. Let’s know about them.
Manufacturing Enterprises is the first manufacturing enterprise.
All enterprises specified in the First Schedule to the Industries Development and Regulation Act, 1951 engaged in the production or manufacture of goods falling under any industry or those industries which employ plants and machines in value addition to their final product in this segment are included in. i.e. manufacturing enterprise is defined by means of investment in plant and machinery.
Service Enterprises-MSME is the backbone of the Indian economy
The enterprises which are engaged in providing services and defined in terms of investment in equipment are known as service enterprises. For many years these correct definitions were going on for these segments.
But according to the new announcement made by the Finance Minister, the existing distinction between manufacturing and service-based MSMEs has been removed.
Investment and turnover figures were converted to larger values and as a result, the number of medium-sized enterprises has increased.
Revised Classification for MSMEs Enterprises
Micro Enterprises-MSME is the backbone of the Indian economy
Revised Classification for MSMEs Enterprises with an investment of Rs 1 crore in Plant and Machines and a turnover of Rs 5 crore will now be treated as micro-enterprises.
Small Enterprises-MSME is the backbone of the Indian economy
Businesses with investment in Plant and Machines less than Rs 10 crore and turnover of less than Rs 50 crore will now be kept in the category of small enterprises.
Medium Enterprises-MSME is the backbone of the Indian economy
On the other hand, units with an investment of Rs 50 crore in plants and Machines, and a turnover of Rs 250 crore will be considered medium enterprises.
MSMEs Loans, Subsidies, and Relief on Electricity
Firms or enterprises that have registered themselves under the MSME sector are eligible to take prescribed industrial incentive subsidies from the government.
As far as loans are concerned, the Government of India has launched a Credit Guarantee Fund scheme specifically for this sector to help them get collateral-free credit. Presently both existing and new enterprises are eligible to get coverage under this scheme.
All those firms or enterprises having MSME registration certificates are also eligible to get a 50 percent subsidy on patent registration. All enterprises that have to do so, will apply to the ministry concerned. MSME firms also get concession on electricity bills by writing an application to the concerned electricity department along with the registration certificate.
Government Protection on Delay in Payment
The Ministry of Micro, Small, and Medium Enterprises protects MSME firms from buyers for delay in payment and interest on delayed payment through conciliation, arbitration, and settlement of disputes to be made within a minimum period.
This scheme also protects the rights if the MSME firm supplies any goods or services, then the buyer has to make the necessary payment to the firm on or before the due date.
If payment is not made on time-MSME is the backbone of the Indian economy
The buyer will have to make the necessary payment within 15 days of acceptance of the goods or services. Either the buyer has to pay on time or with interest on delayed payments. Buyers cannot delay without appropriate reason. Even in the critical position of the buyer in the position of delayed payment he has to pay interest must.
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