Micro, Small and Medium Enterprises: Meaning, Role and Problems Faced Management YouTube Lecture Handouts

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Micro, Small and Medium Enterprises: Meaning, Role and Problems Faced Management


  • The entities defined in terms of their investment in plant and machinery. The proposal is to change the criteria to the turnover of the entity.
  • It is very important that MSME՚s are promoted and supported adequately because they provide employment to around 8 crore people and contribute to 8 % of Gross Domestic Product.

Coir Factory

Coir Factory
Ministry of MSME


  • The MSME՚s come under Ministry of MSME՚s and the function of the ministry are:
  • Improving competitiveness of the MSME՚s by providing adequate infrastructure, updated technology.
  • Promotion of MSME՚s through cluster-based approach. Clusters are basically groups of owners divided on the basis of their contribution

Definition of MSME՚s

Manufacturing Sector

Manufacturing Sector
EnterprisesInvestment in Plant and Machinery
MicroDoes not exceed 25 Lakhs rupees
Small25 lakhs - 5 Cr.
Medium5 Cr. 10 Cr.

Problems Faced

  • The major problem is that there Is a paucity of finance in order to start a business certain amount is required and this is the major problem in rural areas specially.
  • Inadequate infrastructure in especially rural areas is the biggest problem as there is no connectivity, proper transportation facility.
  • There is also a lack of availability of suitable technology especially in rural areas due to which standardized goods are not manufactured
    • Irregular supply of raw materials: This is because of the proper infrastructure. There is delay in production of goods due to this and eventually leads to loss.
    • Concern or problem in marketing: We know marketing involves making useful products. It also considers designing proper pricing, distribution, promotion strategies. This is a major problem in rural areas.
    • Lack of Trust: It is seen that banks refrain from extending MSME loan since the amount remains small and also, banks believe MSMEs lack the required repayment capacity. In such a situation, they end up implementing stricter regulations on these start-ups.

New Definition

  • Micro Unit: Companies with Investments up to ₹ 1 crore & Turnover of below ₹ 5 crore.
  • Small Units: Companies with Investment of up to ₹ 10 crore & Turnover of below 50 crores
  • Medium Units: Companies with Investment of up to ₹ 50 crore & Turnover of below ₹ 250 crore

Solution to Problems

  • Constitution of a Panel of Consultants: For the purpose of technological advancement and guidance a panel of experts and consultants should be prepared, who can help the MSMEs within the region for effectively transfer the available technologies.
  • Determination of Technological Needs: There should be detailed survey to assess the technical and financial needs of the MSME. So that, the proper arrangement could be made to fulfill the needs of the MSME՚S
  • Training and development, awareness programs: There must be conduction of training and development programs by the MSME ministry. The currently running programs are not so effective and
  • Sufficient availability of the credit: Our banking system does not provide sufficient amount of credit to fulfill their requirement of establishment of MSME and as well as not for the operational activities.
  • Relaxation in labor laws and red tape: There should be relaxation in complex labor laws to avoid the inconvenience in compliance. There should not be procrastination in clearance.


What is the limit of investment in Service in the case of small enterprise?

1.10 lakhs- 2 Cr.

2. Not more than 25 lks

3.2 Cr. – 5 Cr.

4. None of the above

Answer: 1

The MSME՚s are administered by?

1. Commerce Ministry

2. Jal Shakti Ministry

3. National Green Tribunal

4. Ministry of Micro and Small Enterprises

Answer: 4

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