December , 2020
MSME growth path: Role of Education
11:36 am

Manas Kumar Thakur

We all know that for proper growth of children, the contribution of parents often becomes a deciding factor. If parents fail to inculcate the value of true education in the minds of the children, their life cannot prosper. Proper guidance by educated parents will pave the way for capacity building, self-sufficiency and enable children to look out for fresh challenges and opportunities. In a way, we may consider MSMEs as small children who need adequate support and hand holding to cross the streets of uncertainty and competition.

The following data shows that the MSME sector is important for the Indian economy and needs significant attention and careful nurturing. India has 6.33 crore MSMEs out of which 6.30 crore — 99.4% are micro-enterprises while 0.52% — 3.31 lakh are medium enterprises and 0.007% — only 5,000 are medium enterprises. Over 110 million Indians have been employed in micro, small or medium businesses across India in the financial year 2020. The MSME sector contributes 30% to GDP, 48% to exports – contributing around 6000 items.

The government has reworked the definition of MSMEs. The following thresholds have been announced - coming into effect from July 1, 2020:




(Manufacturing & Service Sector)



Micro Enterprises

Rs. 1 Crores

Rs. 5 Crores

Small Enterprises

Rs. 10 Crores

Rs. 50 Crores

Medium Enterprises

Rs. 50 Crores

Rs. 250 Crores


Globalisation, the diverse workforce environment and use of information technology have made organisations recognise learning and development as a competitive advantage. In a knowledge-based economy, the collective skills of its employees are critical to success. Enterprises with a culture of learning are some of the highest performers in competitiveness, agility, and engagement. Effective learning has led to greater employee motivation and satisfaction as employees feel keenly valued. This is particularly prevalent in the small-medium sized enterprise (SME) sector where businesses have similar needs as multinational giants but do not have the level of resources required to service them.

The study aims to make an assessment of Covid-19 on the Indian economy by analysing its impact on growth, manufacturing, trade and on the micro, small and medium enterprises (MSME) sector, and highlights key policy measures to control the possible fallout in the economy. The impact of the pandemic across sectors and in different scenarios of complete, extended and partial lockdown, and at different levels of capacity utilization has been critical for the Indian economy. India’s economy may barely manage to have a positive growth of 0.5% in an optimistic scenario but also faces the possibility of a 3–7% negative growth in worst case scenarios for the calendar year 2020. The impact has been severe on trade, manufacturing and MSME sectors. The likely impact (deceleration) of Covid-19 from the best-case scenario to the worst scenario are as follows: The manufacturing sector may shrink to 5.5% from 20%, exports to 13.7 from 20.8%, imports to 17.3 from 25% and MSME net value added (NVA) to 2.1 from 5.7% in 2020 over previous year. The economy is heading towards a recession and the situation demands systematic, well targeted and aggressive fiscal-monetary stimulus measures.

MSMEs not only play a crucial role in providing large employment opportunities at comparatively lower capital cost than large industries but also help in industrialisation of rural and backward areas, thereby, reducing regional imbalances, assuring more equitable distribution of national income and wealth.

Over the past five years, the MSME sector has emerged as a dynamic sector of the Indian economy. On one hand, MSMEs play an important role in employment generation at comparatively low capital cost and on the other hand, it helps to industrialize rural and backward areas. Therefore, this vibrant sector has reduced regional imbalances, thereby, assuring more equitable distribution of national income and wealth. They sometimes contribute to the large industries as ancillary units.

In 2006, a policy to address the issues affecting the MSME's was introduced in the name of Micro Small and Medium Enterprises Development (MSMED) Act. The Act is the first-ever legal framework for the recognition of the enterprises. According to this Act, the primary responsibility of promotion and development of these enterprises lies in the hands of the state governments and can be supplemented by the central government.  

Various schemes and programmes have been undertaken which can be accessed as below:

  1. Encourage entrepreneurship: Through the adequate flow of credit from financial institutions and banks. All banks and financial institutions recognize MSME and provide schemes for their commercialization. In order to sustain MSMEs, tax benefits in the initial years of business, such as excise duty exemption, and exemption from certain direct taxes may be implemented.
  2. Support for technological upgradation, infrastructure facilities
  3. Employment opportunities: skill up gradation, capacity building, and training facilities.
  4. Livelihood opportunities: the welfare of artisans and workers
  5. Support for product development and access to the domestic and international market.

Types of MSME Registration:

  1. Provisional MSME registration: It is granted to a unit during the pre-investment period. Benefits of the same are:
  • To avail facilities of accommodation, land, and other approvals
  • To get the necessary No Objection Certificates and other clearances form their respective regulatory bodies.
  1. Permanent MSME registration: It is granted to an existing unit that is functional. Benefits of the same are:
  • Tax exemptions from state and central government.
  • Price and purchase preference for goods produced.

MSMEs can apply for MSME registration in India. Proprietorships, Hindu undivided family, partnership firm, one-person company, limited liability partnership, private limited company, limited company, producer company, any association of persons, co-operative societies or any other undertaking can obtain MSME registration. Moreover, in accordance with the Micro, Small, and Medium Enterprises Development (MSMED) Act in 2006, the enterprises are classified into two divisions.

  1. Manufacturing enterprises – engaged in the manufacturing or production of goods in any industry
  2. Service enterprises – engaged in providing or rendering services


Guidance and dissemination of information - a must for MSMEs

For proper growth of MSMEs, it is imperative that they are aware of the various facilities specially made for them and they should be encouraged to avail benefits of the same. Some of the important areas where actions are needed are mentioned below to help them. It should be appreciated that MSMEs operate in a restricted cost structure and optimum capital allocation domain.

Item of Assistance for MSME or Challenges 

Education is Needed

(i)       Create awareness among SMEs and individuals to take advantage of various schemes of the ministry

They must know the various schemes as applicable to them or should be made aware through various initiatives.

(ii)    Motivate SMEs to take advantage of facilities for technological upgradation, modernisation, quality improvement and infrastructure created priority mapping for product, resource utilisation by various organizations under the ministry.

Proper guidance on market development, economy, product demand, customer preferences, IT infrastructure benefits etc.

(iii)  Create awareness and motivate SMEs for developing their Human Resources through training and skill up gradation.

Education will help proper human resource allocation & planning.

(iv)  Create awareness demographically as well as geographically among SC/ST, women and other weaker sections for obtaining benefits of the schemes being run by the Ministry of MSME.

To know the scheme MSMEs should develop knowledge bank

(v)     Market

Market means both the domestic and international markets. So MSMEs should broaden their views to capture any new opportunities.

(vi)  Financial

This is the most critical part for any business particularly for MSMEs. To raise capital from banks /NBFCs at minimum cost they should understand the scope, risk, availability and documentation. 

(vii)                  Others like incubation, women entrepreneurship, capital subsidy, Supply Chain Management, credit guarantee, Udyog Adhaar, & etc. 

All the items are having significance in MSMEs, so management must know or be aware through proper education or encourage discussion 


















How education is linked with MSME activities are given below


Sometimes education helps to take the opportunities like availing loans without collaterals, subsidy on patent registration & industrial promotion, overdraft facility along with interest rate exemption, concession on electricity, protection against delayed payments, ensured ISO certification charges reimbursement and availing industrial promotion subsidy eligibility.

The modern world is helplessly observing fast depletion of natural resources. In India, 30,000 hectares of cultivated land are decreasing every year. In the near future we may lose the food surplus tag - becoming a food deficit country. Our population (138 crore) is around 18% of the total population of the world but we have only 4% of fresh water.  Out of that 4%, 18% is used for agriculture. To mitigate these risks and to increase productivity, we need to look beyond big corporations. We need to nurture MSMEs which will take the lead to transform the Indian landscape. To do this, we need to offer a solid foundation to the MSMEs on which they can build Atmanirbhar Bharat. And for that to take shape, importance must be given on relevant education and training.

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