MSME (Micro, Small, and Medium Enterprise) term was introduced by the Government of India in agreement with the Micro, Small & Medium Enterprises Development (MSMED) Act, 2006. MSME is initiated and managed under the Ministry of MSME (MoMSME) are entities engaged in the production, manufacturing, processing, or preservation of goods and commodities.
MSME sector is considered the backbone of the Indian economy and contributes nearly accounts for 27% of the country’s GDP. It primarily works for the development of people from backward and rural areas. As per the official MSME annual report of 2021-22, the Total number of MSMEs in India are 6,33,88,000 out of which 3,24,88,000 MSMEs (51.25%) are in rural area and 3,09,00,000 lakh MSMEs (48.75%) are in the urban areas.
As per the official data of IBEF.com as of 25th Nov 2022 as provided by Ministry of Micro, Small and Medium Enterprise (MoMSME), there are 12,201,448 Registered MSMEs in India at Udyam Registration Portal, wherein Micro-enterprises are 11,735,117 (96.17%), Small enterprises are 426,864 (3.49%) and Midsized enterprises are 39,467 (0.32%).
To know more regarding MSMEs in India, let’s discuss their basics, such as classifications, loan schemes, role, and importance in the socio-economic development of India.
Also Read: 5 steps to register MSMEs and Know documents required, Process, Fees
New MSME Classification
The distinction between the manufacturing and services enterprises has been removed by making the investment amount and annual turnover similar for enterprises engaged in both sectors.
| MSME – Merged Criteria: Investment and Annual Turnover | |||
| Sector/Enterprise Type | Micro-Enterprise | Small Enterprise | Medium Enterprise |
| Manufacturing & Services Sector, Both | Investment less than Rs. 1 crore Turnover less than Rs. 5 crore | Investment less than Rs. 10 crore Turnover up to Rs. 50 crore | Investment is less than Rs. 50 crore Turnover up to Rs. 250 crore |
MSME Loan Schemes initiated by the Govt. of India
MSME schemes offered by financial institutions and initiated by the Indian Government are mentioned below:
- CGTMSE: Credit Guarantee Fund Trust for Micro and Small Enterprises
- CLCSS: Credit Linked Capital Subsidy Scheme
- Credit Guarantee Scheme
- MUDRA Yojana under PMMY
- National Small Industries Corporation (NSIC) Subsidy
- PMEGP: The Prime Minister Employment Generation Programme
- PMRY: Prime Minister’s Rozgar Yojana
- PSB Loans in 59 minutes
- Standup India
- Startup India
Also Read: What are the documents required for getting a quick MSME loan?
Comparison of Business Loan Interest Rates offered by Top Banks/NBFCs – March 2023
| Bank/NBFCs | Interest Rate | |
| Axis Bank | 14.95% - 19.20% p.a. | Apply Now |
| Bajaj Finserv | 9.75% - 30% p.a. | Apply Now |
| Flexiloans | 1% per month onwards | Apply Now |
| HDB Financial Services Ltd. | Up to 36% p.a. | Apply Now |
| HDFC Bank | 10% - 22.50% p.a. | Apply Now |
| IDFC First Bank | 10.50% p.a. onwards | Apply Now |
| Indifi | 1.50% per month onwards | Apply Now |
| Kotak Mahindra Bank | 16% - 26% p.a. | Apply Now |
| Lendingkart | 12% - 27% p.a. | Apply Now |
| Mcapital | 2% per month onwards | Apply Now |
| NeoGrowth Finance | 19% - 24% p.a. | Apply Now |
| Tata Capital | 12% p.a. onwards | Apply Now |
| UGRO Capital | 14.90% p.a. | Apply Now |
Note: Business loan interest rates are updated as on March 2023
Features of the Ministry of MSME (MoMSME)
- Works for the welfare of artisans and workers
- Provides credit limit or funding support from banks
- Promotes entrepreneurship development and skill up-gradation via specialized training centers
- Supports technology up-gradation, infrastructural development, and modernization
- Offers assistance for improved access to domestic and export markets
- Provides modern testing facilities and quality certification
- Supports packaging, product development, and design intervention
Key entities that work under the MoMSME:
- A Scheme for Promotion of Innovation, Rural Industries, and Entrepreneurship (ASPIRE)
- Khadi and Village Industries Commission (KVIC)
- Mahatma Gandhi Institute for Rural Industrialization (MGIRI)
- National Institute for Micro, Small, and Medium Enterprises (NIMSME)
- National Small Industries Corporation (NSIC)
- Scheme of Fund for Regeneration of Traditional Industries (SFURTI)
Opportunities in MSMEs
The opportunities in the MSME industry are massive due to the succeeding factors:
- Export Promotion and potential for Indian products
- Funding – Finance & Subsidies
- Government’s Promotion and Support
- Growth in demand in the domestic market
- Less Capital required
- Manpower Training
- Project Profiles
- Raw Material and Machinery Procurement
- Tooling & Testing support and much more
Factsheet of MSME Registration (2022-23)
Total MSME Registration – 1,34,84,325 | ||
| Micro | Small | Medium |
| 1,29,33,143 | 4,38,952 | 39,992 |
Source: Udyam Registration’s Official website. – Updated as on March 2023.
Estimated numbers of MSMEs in India – 2021-2022
| Activity Category/Sector | Estimated Number of Enterprises (in lakh) | Share |
| Manufacturing | 196.65 | 31% |
| Trade | 230.35 | 36% |
| Services | 206.85 | 33% |
| All | 633.88 | 100% |
Source: https://msme.gov.in/ (Last updated as on March 2023)
List of projects that have been identified by the Ministry of MSME for promoting MSMEs in aspirational districts with a number of projects:
- Prime Minister Employment Generation Program (PMEGP) – 178
- Micro & Small Enterprises Cluster Development (MSE-CDP) – 81
- EDP/MDP schemes – 46
- Entrepreneurial and Managerial Development of SMEs through Incubators – 13
- MSME Market Development Assistance (MDA) – 12
- Marketing Assistance & Technology Upgradation (MATU) – 10
- Revamped Scheme of Fund for Regeneration of Traditional Industries (SFURTI) – 10
- Credit Guarantee Trust Fund for Micro & Small Enterprises (CGTMSE) – 7
- Credit Linked Capital Subsidy for Technology Upgradation – 6
- Financial Support to MSMEs in ZED Certification Scheme – 4
- Technology and Quality Upgradation Support to MSMEs – 4
- Lean Manufacturing Competitiveness for MSMEs – 3
- Design Clinic for Design Expertise to MSMEs – 1
- Assistance to Training Institutions (ATI) – 1
- A Scheme for Promoting Innovation, Rural Industry & Entrepreneurship (ASPIRE) -1
- Skill Upgradation & Mahila Coir Yojana (MCY) – 2
- Market Promotion & Development Scheme (MPDA) 1
- Performance and Credit Rating Scheme 1
- Marketing Support/Assistance to MSMEs (Bar Code)
- Others – 52
Role of MSMEs in the Indian Economy
In 1961, with the merger of the Ministry of Small Scale Industries and the Ministry of Agro and Rural Industries; the Ministry of Micro, Small, and Medium Enterprises (M/o MSME) was formed.
MSMEs produce and manufacture a wide variety of products for domestic, as well as international markets. MSMEs help in the promotion of growth and development of Khadi, Village, and Coir Industries, in cooperation with concerned ministries, state governments, and stakeholders.
Below mentioned data in tabular representation is as per the Central Statistics Office (CSO) and Ministry of Statistics & Program Implementation.
Contribution of MSMEs to Country’s Economy at Current Price
| Year | MSME Gross Value Added | Growth (%) | Total Gross Value Added | Share of MSME in GVA (%) | Total GDP | Share of MSME in GDP (in %) |
| 2011-12 | 2622574 | – | 8106946 | 32.35 | 8736329 | 30 |
| 2012-13 | 3020528 | 15.17 | 9202692 | 32.82 | 9944013 | 30.40 |
| 2013-14 | 3389922 | 12.23 | 10363153 | 32.71 | 11233522 | 30.20 |
| 2014-15 | 3704956 | 9.29 | 11504279 | 32.21 | 12467959 | 29.70 |
| 2015-16 | 4025595 | 8.65 | 12566646 | 32.03 | 13764037 | 29.20 |
| 2016-17 | 4405753 | 9.44 | 13841591 | 31.83 | 15253714 | 28.90 |
Source: Central Statistics Office (CSO), Ministry of Statistics & Program Implementation
Under the Micro, Small, and Medium Enterprises Development Act, 2006, the Government of India established The National Board for Micro, Small, and Medium Enterprises (NBMSME) to examine the factors affecting the promotion and development of MSME. This board also reviews the existing policies and suggests recommendations to the Government for the growth of the MSME sector.
The term Micro Small and Medium Enterprise (MSME) was launched to become an integral part of the supply chain for products and services and; moreover, a creator of large-scale employment opportunities in rural India.
16 Comments. Leave new
Weather CIBIL score applicable for MSME loans ?
Hello Ranga,
Yes, CIBIL score is applicable and valued by financial institutions like private and public sector banks. However, it is less applicable with NBFCs, Small Finance banks and Regional Rural Banks.
Thanks.
Hello Nizam,
Yes, you can avail business loan for already running training institute, if you qualify the eligibility criteria defined by the bank or lender. The interest rate shall depend on your financial profile and loan amount. Rest you can check and compare various business loan deals from all leading financial institutions at paisabazaar.com.
Thanks.
Hey i am a manufacturer of polyster lining cloth and i want government tenders and also want to start export of my cloth .so can you help me in this ?
Hello Ankkit,
Regarding Govt. tenders for your business, you shall need to contact your respective state authority or organization engaged in providing tenders. To start export of your cloth business, we can assist you in getting business loan or working capital loan, if required.
Thanks.