Micro, Small and Medium Enterprises (MSMEs) have been recognised as one of the most important sectors for the development of any economy all over the world. This sector constitutes more than 80% of all business organisations all over the world. In India

• small road & water transport operators. (owning a fleet of vehicles not exceeding ten vehicles)
• retail trade. (with credit limits not exceeding Rs.10lakh)
• small business. (whose original cost price of the equipment used for the purpose of business does not exceed Rs.20 lac) and
• professional & self employed persons. (whose borrowing limits do not exceed Rs.10 lac of which not more than Rs.2 lac should be for working capital requirements except in case of professionally qualified medical practitioners setting up of practice in semi-urban and rural areas, the borrowing limits should not exceed Rs.15 lac with a sub-ceiling of Rs.3 lac for working capital requirements. 

As may be seen from the above definition, the segment which was earlier known as tiny sector, have been recognized through a formal definition (investment in plant and machinery upto Rs. 25 lac) and has been given the term Micro Enterprise. The investment ceiling in investment in plant and machinery has been raised upto Rs.5.0 crore for small enterprises engaged in production or manufacturing as against Rs.1.0 crore earlier.  It is expected that this enhancement will allow these enterprises to go for technology upgradation and modernization which is one of the prime requirements for enhancing competitiveness in the context of liberalization, globalization and to fulfil the conditions of  WTO. Also, for the first time, official recognition and definition has been given to  medium enterprises  engaged in production or manufacturing as those having investment in plant and machinery between Rs. 5 crore and Rs. 10 crore. The term industries has been replaces by the concept of  enterprises  to include the service sector.  

1.4 Characteristics of SSI

• Growing, generally resilient to adverse conditions.
• They are spread across industry at different stages of maturity.
• MSME’s geographically widespread in different industries.
• Management style is informal
• It is usually present in the form of family business
• MSME’s generally utilizes local resources & produces goods & services
• The production output is in small quantities
• Less no. of workers & Employees are present.
• There is lowest possible capital investment in Plant & Machines
• They have lower gestation period & are easy to set up in rural and backward areas
• The units is not owned, controlled or subsidiary of any other industrial undertakings

1.5 Objectives of SSI

• To promote a decentralized pattern of ownership
• To improve the standard of living for the local population
• To introduce new products particularly to cater to the local needs
• To increase employment opportunities through labour intensive process
• To address the needs of local markets
• To stimulate growth of local entrepreneurship
• To foster diversification of economic activities  

2.ROLE OF MSME’S IN ECONOMIC DEVELOPMENT

One of the significant characteristics of a flourishing and growing economy is a booming and blooming small and medium enterprises (SMEs) sector. Small and medium enterprises play an important role in the development of a country. SMEs contribute to economic development in various ways by creating employment for rural and urban growing labor force, providing desirable sustainability and innovation in the economy as a whole .In addition to that, a large number of people rely on the small and medium enterprises directly or indirectly.

Most of the current larger enterprises have their origin in small and medium enterprises. SMEs are different from large scale enterprises in three main aspects; uncertainty, innovation and evolution.SMEs are the starting point of development in the economies towards industrialization. However, SMEs have their significant effect on the income distribution, tax revenue, and employment, efficient utilization of resources and stability of family income. According to the United Nations Industrial Development Organization UNIDO, for developing countries, integration into the global economy through economic liberalization, deregulation, and democratization is seen as the paramount way to triumph over poverty and inequality. Important to this process, is the development of an animated private sector, in which small and medium enterprises can play a central role.

SMEs have a propensity to employ more labor-intensive production processes than large enterprises. Consequently, they contribute significantly to the provision of productive employment opportunities, the generation of income and, eventually, the reduction of poverty.
According to the statistics, in industrialized countries, SMEs are major contributors to private sector employment. Empirical studies have shown that SMEs contribute  to over 55% of GDP and over 65% of total employment in high income countries .SMEs and informal enterprises, account for over 60% of GDP and over 70% of total employment in low income countries, while they contribute about 70% of GDP and 95% of total employment in middle income countries.

In India MSME’s account for almost 45% of the total industrial production.They contribute to 40% of the Exports of the country.Also statistical data shows that they manufacture over 6,000 products of the country.For India,it is  the second largest employer in India after agriculture.The total jobs in the MSME’s in India goes up to 6 crores ( Acc to 11th 5 year Plan).It even provides   opportunities for development of technology. For India, MSME’s  contributes 5 – 8% of the GDP of the country.

SMEs play significant contribution in the transition of agriculture-led economies to industrial ones furnishing plain opportunities for processing activities which can generate sustainable source of revenue and enhance the development process. SMEs shore up the expansion of systemic productive capability. They help to absorb productive resources at all levels of the economy and add to the formation of flexible economic systems in which small and large firms are interlinked. Such linkages are very crucial for the attraction of foreign investment. Investing transnational corporations look for sound domestic suppliers for their supply chains.

The role of SMEs is well acknowledged  in all  industrialized economies in terms of creating employment, reducing poverty and increasing the welfare of the society. The statistical data and empirical studies about SMEs highlight the bulk share of SMEs in the economy.

SMEs are a distinctive mainstay of the economy that requires owing attentiveness. The evidence shows that small firms are discriminated against relatively large firms. Large scale firms can cope and solve their hurdles due to possessing sound experience and financial position. SME due to their small size and the resulting peculiarities, are far less capable of adjusting and carrying on successful business. They play a vital role in changing the industrial scenario and strengthening the industrial sector tremendously. They assist the utilization of assets for productive purposes with minimal initial resources. SSIs have contributed greatly in nurturing private enterprise and in hastening the economic development by generating employment, exports, and reducing local unevenness.  

This sector estimated to possess a huge potential in the growth of trade with the array of products it offers. With 45 percent share in total industrial output and 40 percent share in exports, small scale industries significantly contribute to the fiscal intensification of the country.    In a nation like India small scale industries come as boons. They persuade entrepreneurship and help in employment of local populace. The domestic talents are put to good use to produce commodities that have found market worldwide.

Small scale industries to a degree avert needless urbanization. The number of people migrating to cities in search of jobs shrinks by the employment options domestic industries create thereby reducing pollution and over population in cities and also helps in decentralized industrial expansion. The main reason of a small scale industry is to achieve self reliance by utilizing the resources available and harnessing the skills of local people to lay a platform that yields a steady income. The industries are characterized by the wise utilization of labor for the commodity production and the advantage lies in the fact that is consumption of ample laborers who are not qualified to work for the large scale industries and thus reducing unemployment and poverty in the country as well. Small Scale Industries help the financial system in promoting evenhanded development of industries across all the regions of the economy and also in the efficient distribution of money.

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3.GOVERNMENT SUPPORT FOR MSME’S DURING 11TH FIVE YEARS PLAN (2007-2012)

The 11th plan’s approach to the MSE sector marks a shift from the welfare approach to that of empowerment. The strategy is two pronged it focuses on livelihood and social security.Policy initiatives are proposed to incentivize MSE’s to achieve economies of scale by expanding production. One possibility could be to allow them to retain the benefit of excise duty exemption up to the prescribed limit even after they graduate into MSE’s.The MSE sector, including handlooms and handicrafts, presents an opportunity for exports. The effort during the plan period will therefore be to organize this sector, to create clusters of weavers/artisans to improve their bargaining power, and enable them to pool resources.Banks will be encouraged to ensure that all loans up to 5 lakh to MSE’s are given free of collateral at the interest rate of 8%.

         Govt. wants its growth at a faster pace through the support of financial institutions. And for this purpose it came out with fresh guidelines in 2005 as special package for MSME and introduced following important steps to boost growth of MSME Sector --

1. Define Micro, Small and Medium enterprises
2. PSBs  to  fix  their  own  target  -  Min   20% growth every year  so that outstanding is doubled every five years.

3. Doubling of Credit flow  from    67,600 cr in 2004-05  to 135,200  cr by 2009-10
4. SIDBI,  in  association  with  IBA have developed an IT  enabled    software    programme     for     application appraisal and monitoring for Small   Clusters  known as CART
5. Each branch to finance at least five new Tiny, S M & E at Semi-Urban  and Urban branches every year.
6. Nursing of Sick units through Debt Restructuring.
7. CGTSME –This scheme is modified and its scope widened.
8. Cluster based approach to be adopted for robust growth of this sector.

10.Setting up of watchdogs-RBI, Banks to monitor Credit flow to SME.

Based on the guidelines Govt. came out with an Act. Known as MSMED Act.2006—which is    Effective from 02.10.2006

    SPECIAL FEATURES of MSMED Act.2006—

A) classification of enterprises—MSME has been properly defined (As above)

B) Promotional Provisions –In various promotional activities i.e. trade fair etc. there will be some   reservation of stalls for MSME Sector to display their products.

 C) Preference Procurement Policies—Public sector undertakings will give preference to the   products produced by MSME sector if other aspects are same.

D) Checking Delayed Payments—If Public sector undertaking procure some goods from MSME Entrepreneur the payment will be made within 30 days otherwise interest has to be paid for delayed period.

RBI has taken following steps For smooth credit flow to this sector in the recent past –

• Fixation of targets/sub-targets as per new definition.
• Outreach of formal credit: Opening of new accounts.
• Nursing the sick units :- Debt Restructuring Mechanism.
• Facilitative measures.
• Encouragement of CGTMSE scheme.
• Cluster based approach.
• Setting up of watchdogs: Monitoring & Review

RBI   instructed    all   banks   to   formulate   a comprehensive  and   more  liberal  policy   for MSME financing taking into account following guidelines as indicative minimum:-

1. Disposal of applications within 2 or 4 week as applicable.
2. Loan application register is to be maintained at branches.
3. Issue of Acknowledgement of Loan Applications
4. Rejection of applications not to be done without the approval of the next higher authority
5. Photo of Borrowers: Free of cost for weaker section 
6. Collaterals are not require up to 100 lac.
7. Composite loan up to 100 lacs through single window.
8. Specialised financing branches renames as SME branches.
9. Norms for computation of limits up to 5.00 crore working capital by turnover method.

Since December, over 38500 accounts of MSMEs have been restructured. The interim budget has extended the 2% interest rate subvention in shipment credit up to the end of the second quarter of the next fiscal. The size of refinance facility with SIDBI has been increased by Rs. 10,000 crore. The Central Government is ensuring that the MSME Act, of making payments within 45 days, is being implemented. Most banks have set up special SME care centres. The Government on the other hand claims that the problems being faced by MSMEs are being thoroughly addressed.

3.1 Supporting Agencies of Government For MSME’s

• MSME Board
• MSME Development Organization
• MSME Development Institutions
• MSME Technology Development Centers
• MSME Testing Centers and MSME Testing Stations
• MSME Tool Rooms/Tool Design Institutes
• Entrepreneurship Development Institutes
• National Small Industries Corporation
• Small Industrial Development Bank of India (SIDBI)
• Khadi & Village Industries Commission (KVIC)

For strengthening the delivery of credit to the MSMEs, the Government announced a ‘Policy Package for Stepping up Credit to SMEs so as to double the credit flow to this sector within five years. To facilitate the flow of credit to MSMEs, RBI has announced a refinance facility of Rs. 7,000crore for SIDBI which will be available to support incremental lending, either directly to MSMEs or indirectly via banks, NBFCs and SFCs.

Government has made it mandatory for all central and state PSE wings including private units to make payments to MSMEs units within 45 days of the date of purchase of goods from them. All public sector banks are to setup Regional MSME Care Centres to facilitate MSME entrepreneurs for quick redressal of their grievances..

4.PROBLEMS OF SMALL SCALE INDUSTRIES

The main problem is of finance (scarcity of capital, non availability of credit facility).Another is of availability of raw Material (Poor quality, uneven supply of raw material, inadequate quantity).Industries are not exposed to latest technology.

• The production problems include raw material availability, capacity utilization, and storage problems.

• The marketing problems arises because of dealing in only one product, cut throat competition, adopting cost oriented method of pricing, lack of advertisement, not branding their products etc.,
•  The financial problems include investment risks, procurement of loan from banks and their repayment, meeting day to day expenses and the like.
•  The labour problems include highly demanding employees, absenteeism lack of skilled workers and transportation of workers.
•  Infrastructure problems also add coal to the fire. Unless and until you have the infrastructure in its place the rest of the efforts are futile.
•  Personal problems like spending less time with family and for the whole sweat exerted the rewards have not been favorable.

Small scale industries are at a distinct disadvantage as compared to large scale industries. The scale of operations, availability of finance,  ability to use modern technology, procurement of raw materials are some of these areas. This gives rise to several problems. Most of these problems can be attributed to the small size of their business, which prevents them from taking advantages, which accrue to large business organisations. However, the problems faced are not similar to all the categories of small businesses. For instance, in the case of small ancillary units, the major problems include delayed payments, uncertainty of getting orders from the parent units and frequent changes in production processes. The problems of traditional small scale units include remote location with less developed infrastructural facilities, lack of managerial talent, poor quality, traditional technology and inadequate availability of finance.

The problems of exporting small scale units include lack of adequate data on foreign markets, lack of market intelligence, exchange rate fluctuations, quality standards, and pre-shipment finance. In general the small businesses are faced with the following problems:

• Finance: One of the severe problems faced by SSIs is that of nonavailability of adequate finance to carry out its operations. Generally a small business begins with a small capital base. Many of the units in the small sector lack the credit worthiness required to raise as capital from the capital markets. As a result, they heavily depend on local financial resources and are frequently the victims of exploitation by the money lenders. These units frequently suffer from lack of adequate working capital, either due to delayed payment of dues to them or locking up of their capital in unsold stocks. Banks also do not lend money without adequate collateral security or guarantees and margin money, which many of them are not in a position to provide.
• Raw materials: Another major problem of small business is the procuremen t of raw materials. If the required materials are not available, they have to compromise on the quality or have to pay a high price to get good quality materials. Their bargaining power is relatively low due to the small quantity of purchases made by them. Also, they cannot afford to take the risk of buying in bulk as they have no facilities to store the materials. Because of general scarcity of metals, chemicals and extractive raw materials in the economy, the small scale sector suffers the most. This also means a waste of production capacity for the economy and loss of further units.
• Managerial skills: Small business is generally promoted and operated by a single person, who may not possess all the managerial skills required to run the business. Many of the small business entrepreneurs possess sound technical knowledge but are less successful in marketing the output. Moreover, they may not find enough time to take care of all functional activities. At the same time they are not in a position to afford professional managers.
• Labour: Small business firms cannot afford to pay higher salaries to the employees, which affects employee willingness to work hard and produce more. Thus, productivity per employee is relatively low and employee turn over is generally high. Because of lower remuneration offered, attracting talented people is a major problem in small business organisations. Unskilled workers join for low remuneration but training them is a time consuming process. Also, unlike large organisations, division of labour cannot be practised, which results in lack of specialisation and concentration.
• Marketing: Marketing is one of the most important activities as it generates revenue. Effective marketing of goods requires a thorough understanding of the customer’s needs and requirements. In most cases, marketing is a weaker area of small organisations. These organisations have, therefore, to depend excessively on middlemen, who at times exploit them by paying low price and delayed payments. Further, direct marketing may not be feasible for small business firms as they lack the necessary infrastructure.
• Quality: Many small business organisations do not adhere to desired standards of quality. Instead they concentrate on cutting the cost and keeping the prices low. They do not have adequate resources to invest in quality research and maintain the standards of the industry, nor do they have the expertise to upgrade technology. In fact maintaining quality is their weakest point, when competing in global markets.
• Capacity utilisation: Due to lack of marketing skills or lack of demand, many small business firms have to operate below full capacity due to which their operating costs tend to increase. Gradually this leads to sickness and closure of the business.
• Technology: Use of outdated technology is often stated as serious lacunae in the case of small industries, resulting in low productivity and uneconomical production.
• Sickness: Prevalence of sickness in small industries has become a point of worry to both the policy makers and the entrepreneurs. The causes of sickness are both internal and external. Internal problems include lack of skilled and trained labour and managerial and marketing skills. Some of the external problems include delayed payment, shortage of working capital, inadequate loans and lack of demand for their products.
• Global competition: Apart from the problems stated above small businesses are not without fears, especially in the present context of liberalisation, privatisation and globalisation (LPG) policies being followed by several countries across the world.

4.1COMMON CAUSES OF FAILURE

There are a variety of reasons why a small business often fails. There are some steps that small business owners can do to avoid them. Here are ten causes of small business failure and how to avoid them.

 1. Most small business owners don't have enough money saved up.
2. Some companies don't have enough advertisements throughout the year.
3. Some companies fail since they don't generate enough sales.
4. The company doesn't hire enough staff.
5. The company doesn't have a high enough budget. This is where most companies fail at since they don't have enough money to pay everything.
6. The company can't survive during the slow season so they often fail. The company needs to figure out a way to generate enough sales or save up enough money to survive during the slow season of the company.
7. A company doesn't have enough money to expand the business even though it needs too. The company needs to get a business loan, save money, or even outsource the work somehow.
8. Some try to be cheap on products or service then they often fail.

The various factors associated with regards to failure and success of MSME’s are

Table 4.1 showing various factors affecting MSMEs

4.2 SICKNESS IN SME

In common parlance , a sick industry is one which is not healthy. A healthy unit is one which earns a reasonable return on capital employed and which builds up reserves after providing reasonable depreciation.

According to RBI “a sick unit is one which incurs cash losses for one year and is likely to incur cash losses for the current year as well as for the following year”.The Sick Industrial Companies Act 1985, defines a sick industry as “an industrial company which has at the end of any financial year accumulated losses equal to or exceeding its entire net worth and has also suffered from cash losses in such financial year immediately preceding such financial year.

4.2.1Criteria to identify sickness

Following criteria indicate the sickness:

• Continuous decline in gross output compared to the previous two financial years.
• Delays in repayment of institutional loan, for more than 12 months.
• Erosion in the net worth to the extent of 50 per cent of the net worth during the previous accounting year.

4.2.2 Signals of industrial sickness

• Decline in capacity utilization
• Shortage of liquid funds
• Inventories in excessive quantities
• Irregularity in maintaining the bank accounts
• Frequent break downs in plant & equipments
• Decline in the quality of products
• Frequent turnover of personnel
• Technical deficiency

4.2.3 Symptoms of Industrial Sickness

• Shortage of cash
• Deteriorating financial ratios
• Widespread use of creative accounting
• Continuous decline in prices of the shares
• Delay & default in the payment of statutory dues
• Morale degradation of employees
• Frequent request to banks & financial institutions for loans
• Delay in the audit of annul accounts

4.2.4 Consequences:

• Huge financial losses to the banks & financial institutions
• Loss to employment opportunities
• Emergence of Industrial unrest
• Adverse effect on perspective investors and entrepreneurs
• Wastages of Scarce resources
• Loss of revenue to government

4.2.5 Remedial Measures Monitoring and nursing the sick units during infancy

• Diagnostic studies
• Incentives should be provided to professional managers helping in reviving sick units
• Issuing guidelines on major aspects that affect the image of the company
• Brain storm with a select group to get creative ideas for improvement
• Adopt better practices, right technology, better work culture and professional management SSI can improve their health as well as the economy.

NATIONAL MANUFACTURING A COMPETITIVENESS PROGRAMME     

With a view to build the capacity of the Indian Micro, Small and Medium Manufacturing Enterprises for overcoming competition in the global markets and facing challenges being posed by the entry of the multi-nationals in the domestic markets, the Government of India has announced the National Manufacturing Competitiveness Programme (NMCP) during the budget  speech 2005-06.The objective of NMCP with can be truly regarded as ‘National Strategy for Manufacturing’ is to ensure healthy growth of the MSME Sector. The 10 components of the Programme dealing with the firm level competitiveness against global challenges are being implemented in the Public Private Partnership (PPP) mode.

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5.PRODUCTS OF MSME’S

Chart 5.1:Different products of MSME

• Following items are reserved for exclusive manufacture by micro and small enterprise sector:

• Food and Allied Industries: Pickles & Chutneys, Bread, Mustard Oil (except solvent extracted), Ground nut oil (except solvent extracted).
• Wood and Wood Products: Wooden furniture and fixtures
• Paper Products: Exercise books and registers
• Injection Moulding Thermo Plastic Product: PVC Pipes, including conduits upto 110 mm dia, Fittings for PVC pipes
• Other Chemicals & Chemical Products: Wax candles, Laundry soap, Safety matches, Fire works, Agarbatties
• Glass & Ceramics: Glass Bangles
• Mechanical Engg. Excluding Transport Equipment: Steel almirah, Rolling shutters, Steel chairs – all types, Steel tables – all other types, Steel furniture – all other types, Padlocks, Stainless steel utensils, Domestic utensils - Aluminium

5.1CONTRIBUTION OF MSME

TABLE 5.1:GDP and contribution of MSE

The  table shows total industrial production of MSME throughout the years from1999-2007.As we can see consistent contribution is made by MSME.They contribute approx about 6% towards the GDP of the nation

5.2Comparative Growth Rates.

Table 5.2:Comparision of growth rates

The table shows comparision of growth rates of MSME and overall industrial sector.It is evident that MSME had shown considerable growth and also more than overall industrial sector .

The above chart shows increase in production in MSME sector. It has continuosly increased around 3.5 lac million   to 7 lac million.

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6.LATEST ADVANCEMENTS IN MSME

• Big Boost For MSEs

The Working Group, set up to review the Credit Guarantee Scheme of the Credit Guarantee Fund Trust has  recommended the mandatory doubling of the limit for collateral-free loans to micro and small enterprises (MSEs) to Rs 10 lakh from the current Rs 5 lakh. government policy has rightly accorded high priority to this sector in order to achieve balanced, sustainable, more equitable and inclusive growth in the country. 

Advances extended to the MSE sector are treated as priority sector advances and as per the existing the Reserve Bank of India guidelines, banks are required to extend at least 60% of their advances to the MSE sector. So the implementation of the recommendations of the Working Group would result in enhanced usage of the Guarantee Scheme and facilitate increase in quality and quantity of credit to the MSE sector, leading eventually to sustainable inclusive growth of the pivotal sector in India.

• Compliance For Growth & Sustainability

The existing insolvency laws with respect to individual insolvencies continue to govern small and medium  enterprises (SMEs) and there is a need to address this issue comprehensively. MSMEs also need to be sensitive about the expectations of the stakeholders, especially the workers and the immediate communities and make efforts to address these expectations within the constraints of their business models. Regulatory compliance is crucial for businesses to make their investors and stakeholders hold positive perceptions about the conduct of their business.

• Skill Development in Indian SMEs: A Global Perspective

The SME sector is crucial to employment  generation, decentralized development and low cost products and services. Most of the handicrafts, including wooden handicrafts, wrought iron crafts and other enterprises involved in textile and garment, etc., fall within the SME sector. The imperatives are:

• National Rural Employment Guarantee Act (NREGA) would have to be more effective so that the Indian economy can incrementally move away from the concept that agriculture is the end of rural markets.
•  For making Indian infrastructure investment attractive, high cost of debt to infrastructure should be addressed in some form.
• Along with focus on power and roads, adequate focus should also be placed on transmission of power and water management. Some kind of short-term subsidy should also be introduced.
• The concept of Special Economic Zones (SEZ) should also be strengthened for handicrafts and other SMEs.

The Chamber of Small Industries Association (COSIA) has said that the facility of quarterly returns and availability of full credit on capital goods proposed in the Union Budget 2010-11 for MSEs is a positive step. Further, the government is likely to come out with a policy in the next two months to make it mandatory for state-owned firms to buy at least 20% of their total purchases from MSEs.

• Promoting Green Entrepreneurs

New Ventures India (NVI) is a center of sustainable entrepreneurship, specially designed to meet the needs of Indian green entrepreneurs and help them overcome common business challenges to deliver environmental and social benefits as well as economic development and opportunity. New Ventures supports small and medium-sized enterprises (SMEs) operating in fast-growth, green sectors such as:

• Renewable Energy
• Energy Efficiency
• Advanced Technologies for Water Management 
• Organic Agriculture/ Horticulture
• Other Clean Technologies
• Green Building Materials
• Rapidly Renewable Materials
• Waste Management, Recycle & Reuse
• Ecotourism

• Technology for SMEs

         Research has shown that SMEs play an important role in the economic development of countries worldwide. However, for SMEs to compete with large competitors, they must nullify their size disadvantage. Adopting technology to overcome diseconomies of scale and to produce innovations will surely enable SMEs to differentiate themselves. In the current environment, technology is proving to be a strategic weapon to beat competition. Companies that adopt technology early in the life cycle will be well placed to impress their customers and show that they are different as compared to their competition. There is a feeling among SMEs that adopting technology is costly and capital intensive. Often this deters the SMEs, believing the investments are very high and prohibitive. This is not entirely true. One of the ways the SMEs can manage this is by using open source tools and technologies that are freely available. There is a feeling among SMEs that adopting technology is costly and capital intensive. Often this deters the SMEs, believing the investments are very high and prohibitive.This is not entirely true. One of the ways the SMEs can manage this is by using open source tools and technologies that are freely available.

In the current day environment, it is critical that SMEs look at adopting technology to gain competitive advantage. Cost effective mechanisms are available which the SMEs can consider to make the technology journey less strenuous on budgets. Also, SMEs should work  with Technology Partners to make this journey smooth and effective.

CONCLUSION

     Micro, small and medium enterprises (MSMEs) collectively function as the fulcrum of the national economy, accounting for the bulk of industrial output, exports and employment. They play a vital role in changing the industrial scenario and strengthening the industrial sector tremendously. They assist the utilization of assets for productive purposes with minimal initial resources. SSIs have contributed greatly in nurturing private enterprise and in hastening the economic development by generating employment, exports, and reducing local unevenness.

         The Government of India should consider the MSMEs as an important pillar of economic growth and should support the sector with proactive and growth oriented policies. This can have wider impact on national economies since MSMEs are the engines of economic growth .

REFERNCES:

1. www.smetimes.tradeindia.com/smetimes/.../additional-measures-required-for-sme-sector.html
2. www.business-standard.com/india/news/...base-rate...to...msme.../on
3. SME Bussiness  May-2010
4. www.msme.gov.in
5. www.msmefoundation.org
6. ssi.nic.in
7. www.iloveindia.com/finance/.../small-scale-industries.html
8. www.nickmutt.com/small-scale-industries-in-india.htm
9. http://www.industries.org.in/industry-sectors.htm
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