Industrial Sector Updates – Industrial Policy, Ease of Doing Business, etc.

Industry pushes separate Ministry for Microenterprises


From UPSC perspective, the following things are important :

Prelims level: MSMEs categorization

Mains level: Read the attached story

Central Idea: The Consortium of Indian Associations (CIA) has suggested the formation of an independent ministry for the self-employed and microenterprises to address specific issues concerning the sector.

Why demand for new Ministry?

  • Micro entrepreneurs continue to be governed by complicated and outdated laws and dispensable compliance burdens.
  • Despite the government’s efforts, MSMEs in India face several challenges such as access to finance, lack of skilled labor, and inadequate infrastructure.
  • New ministry might help in providing different types of support and benefits from the government, such as access to credit, subsidies, and tax exemptions.

What are Microenterprises?

  • Microenterprises are small businesses that typically have a small number of employees, limited assets, and low levels of annual turnover or revenue.
  • The term “microenterprise” is often used interchangeably with “microbusiness” or “micro firm.”
  • Microenterprises can be found in a wide range of sectors, including retail, manufacturing, and services.
  • Examples of microenterprises include small retail shops, food stalls, street vendors, small manufacturing units, and service providers such as plumbers, electricians, and small-scale service providers.

Features of Microenterprises

  • In general, microenterprises are considered the smallest type of business.
  • They are typically characterized by their low capital investment and simple production processes.
  • These businesses are often started by entrepreneurs who are seeking self-employment and a means to earn a livelihood.

Why are they important?

  • Employability: Microenterprises are an important part of many economies, especially in developing countries, where they can provide vital employment opportunities and contribute to economic growth.
  • Scale of business: Such enterprises have huge potential of business penetration at household and domestic level by providing a range of services.

Microenterprises in India

  • According to the Ministry of Micro, Small and Medium Enterprises (MSMEs), there are approximately 6.3 crore (63 million) MSMEs in India, which employ around 11 crore (110 million) people.
  • In India, MSMEs are classified based on their investment in plant and machinery or equipment, as well as their annual turnover.
  • The classification of MSMEs is as follows:
  1. Micro Enterprises: Micro enterprises are the smallest type of enterprises and have a lower investment limit than the other two categories. For manufacturing enterprises, the investment limit is up to Rs. 1 crore in plant and machinery, while for service enterprises, the investment limit is up to Rs. 50 lakh. The turnover limit for both types of enterprises is up to Rs. 5 crore.
  2. Small Enterprises: Small enterprises are those that have an investment in plant and machinery or equipment between Rs. 1 crore to Rs. 10 crore. For service enterprises, the investment limit is between Rs. 50 lakh to Rs. 2 crore. The turnover limit for both types of enterprises is between Rs. 5 crore to Rs. 50 crore.
  3. Medium Enterprises: Medium enterprises have a higher investment limit than small enterprises. For manufacturing enterprises, the investment limit is between Rs. 10 crore to Rs. 50 crore, while for service enterprises, the investment limit is between Rs. 2 crore to Rs. 5 crore. The turnover limit for both types of enterprises is between Rs. 50 crore to Rs. 250 crore.

Various initiatives

The government of India has taken several initiatives to support the growth of MSMEs in the country, such as:

  • Udyam Portal: The government has introduced a new registration process called Udyam Registration to make it easier for MSMEs to register and avail of various government schemes and benefits.
  • Credit Guarantee Fund Scheme: The Credit Guarantee Fund Scheme provides collateral-free loans to MSMEs from banks and other financial institutions.
  • Cluster Development Programme: The government has launched the Cluster Development Programme to enhance the competitiveness of MSMEs by providing support for infrastructure, technology, and marketing.
  • National SC-ST Hub: The National SC-ST Hub aims to promote entrepreneurship among Scheduled Castes and Scheduled Tribes by providing support for capacity building, market linkages, and access to finance.
  • Technology Upgradation: The government provides financial support to MSMEs for technology upgradation through various schemes such as the Technology Upgradation Fund Scheme and the Credit Linked Capital Subsidy Scheme.

Way forward

If the govt. is to consider creating a separate ministry for microenterprises, there are several steps that could be taken to ensure its effectiveness:

  • Defining clear objectives: This should be based on a thorough understanding of the challenges faced by microenterprises and the opportunities available to them.
  • Coordination with other ministries: The new ministry should coordinate with other ministries to ensure that the policies and initiatives developed are aligned with the broader economic and social objectives of the government.
  • Developing policies and initiatives: The ministry should develop policies and initiatives that address the specific needs of microenterprises in India such as access to finance, technology, and markets.
  • Strengthening institutional capacity: The ministry should have a strong institutional capacity to implement policies and initiatives effectively. This could involve recruiting experts in the field of microenterprises and strengthening the capacity of existing institutions.
  • Creating awareness: The ministry should create awareness among microenterprises about the support and services available to them. This could involve organizing workshops and training programs, as well as leveraging digital platforms to disseminate information.


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