MSMED Act, 2006- A Promotional Tool for MSMES in India

Abstract

All over the map, MSMEs are acknowledged as a conspicuous constituent of national economies as these contribute significantly to GDP, employment generation, utilization of local skillsand resources, equitable distribution of income and wealth and poverty alleviation. As MSMEs employ labour intensive technology, these absorb larger population of highly populated country like India. It was unearthed that in India, the total number of operating MSMEs is 447.73 lakh and these units provide employment opportunities to 1012.59 lakh. It has been identified that MSMEs contribute nearly 8 percent of the country’s GDP, 45 percent of the manufacturing output and 40 percent of the exports. Being cognizant about the crucial role of MSMEs, govt. enforced MSMED Act, 2006 which redefines the meaning of MSMEs. This Act not only attempts to expedite the development and global competitiveness of MSMEs but also introduces expanded advisory functions. It legally recognizes the concept of “enterprise” which comprises both manufacturing and service entities. In present study an effort is being made to have an overview of MSMED Act, 2006 and its impact and to sketch various schemes and programmes of government for the promotion of MSMEs. This paper also highlighted the key challenges and problems comprising financial constraints, poor technology and poor marketing facilities faced by MSMEs in India and it finally recommended some suggestions to policy makers to make MSME Industry more competitive and efficient at global level in this highly competitive era. The Data used for analysis in present study is secondary in nature and collected from various reliable published sources of govt. such as Statistical abstracts of India, Fourth All India Census of MSMEs, Annual Reports of various departments of GOI, Annual reports of Ministry of MSME, Report of World Bank Group etc.