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MSMEs Provide More Employment Opportunities than Large Industries

MSME sector has been creating 11.10 crore jobs including 360.41 lakh in Manufacturing, 0.07 lakh in non-captive electricity generation and transmission
BY Jaspreet Kaur
Feature Writer, BusinessEx
Sep 09,2020

Micro, small and medium-sized enterprises (MSME) are an important part of India’s economy. Apart from being a supporting pillar to the economy, it is also prone to adversities than any other sector. According to the MSME Ministry’s Annual Report 2019-2020, the MSMEs are playing a crucial role by providing large employment opportunities at comparatively lower capital cost than large industries, as well as through industrialization of rural and backward areas, inter alia, reducing regional imbalances, assuring more equitable distribution of national income and wealth. 

According to the National Sample Survey, there were 633.88 lakh unincorporated non-agriculture MSMEs in the country engaged in different economic activities--196.65 lakh in manufacturing, 0.03 lakh in non-captive electricity generation and transmission, 230.35 lakh in trade and 206.85 lakh in other services.

Micro sector, which is a component of the MSME segment, holds 630.52 lakh enterprises and comprises over 99 per cent of MSMEs. On the other hand, the small sector holds 3.31 lakh enterprises and the medium sector holds 0.05 lakh enterprises. The small sector accounts for 0.52 per cent share and the medium sector holds 0.01 per cent share in the vast MSME segment. Amid this, 51.25 per cent MSMEs are based in rural areas of the country whilst 48.75 per cent are in the urban areas of the nation, as per the cited report.  

        (Source: Annual Report 2019-20 by the Ministry of MSME) 

Generating Employment 

Employment signifies progress of an economy. Increased employment rates showcase the positive growth rate and vice versa. The National Sample Survey 2015-16 states that MSME sector has been creating 11.10 crore jobs including 360.41 lakh in Manufacturing, 0.07 lakh in non-captive electricity generation and transmission, 387.18 lakh in trade and 362.22 lakh in other services in the rural and the urban areas throughout the nation.

Micro sector provides employment to a large chunk of people, that is 1076.19 lakh individuals. As a result, it holds over 97 per cent of employment. While the small sector gives employment to 31.95 lakh individuals and holds 2.88 per cent share in total employment. The medium sector contributes 0.16 per cent share in total employment and gives employment to 1.75 lakh people. 

Women Entrepreneurs in MSME Sector 

Amid 633.88 MSMEs, 20.37 per cent enterprises are owned by female entrepreneurs. The percentage of women owning enterprises in rural regions is more than female entrepreneurs in urban regions with 22.24 per cent and 18.42 per cent respectively. 

Amid all sectors, women entrepreneurs hold the highest number of enterprises in the micro sector with 20.44 per cent. It is followed by the Small sector wherein female entrepreneurs accounts for 5.26 per cent and then, medium sector where the female entrepreneurs are 2.67 per cent. 

(Source: Annual Report 2019-20 by the Ministry of MSME)

Coming on the state-wise distribution of the MSMEs, Uttar Pradesh accounts 14.20 per cent, which is the highest count of MSMEs amongst all states. West Bengal is the second state that accounts for 14 per cent share and is followed by Tamil Nadu and Maharashtra, which is third and fourth respectively. Karnataka is fifth with 38.34 lakh enterprises, followed by Bihar, Andhra Pradesh and Gujarat with 34.46 per cent, 33.87 per cent and 33.16 respectively. 

Creating Schemes for MSMEs

The government has formed a scheme "Building Awareness on Intellectual Property Rights (IPR)" to increase the competitiveness of the MSME Sector. Here are the following objective of the scheme: 

  1. To enhance awareness of MSMEs about Intellectual Property Rights (IPRs)
  2. To take measures for protecting their ideas and business strategies. 
  3. Assistance to SMEs in technology Up-gradation and enhancing competitiveness and effective utilization of IPR Tools by MSMEs. 
  4. These objectives are fulfilled through various activities under the scheme like awareness programmes, Seminar workshop, Reimbursement for registration of IP, International Co-operation & setting-up IP facilitation centre across the country.

Considering struggles of MSMEs in North-eastern region of the country, the government has introduced a scheme 'Promotion of MSMEs in North Eastern Region and Sikkim'. Various other schemes and initiatives have been done to aid women as well as disabled people. 

The MSME industry has improved during the fiscal 2019-2020. However, a reverse growth pattern is going on in the current fiscal, in turn, diminishing MSMEs across the country. It will still take some time before the MSME industry to normalise.

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