Page 81 - Quick Insights Book 2022

22 Micro Small and Medium Enterprises (MSME) Sector

MSMEs are the growth accelerators of the Indian economy,
contributing about 30% of the country’s gross domestic
product(GDP).In terms of exports,they are an integral part of the
supply chain and contribute about 40% of the overall exports.
MSMEs also play an important role in employment generation,
as they employ about 110 million people across the country.
Interestingly, MSMEs are intertwined with the rural economy as
well, as more than half of the MSMEs operate in rural India.
To ensure that MSMEs continue to lead the country towards
economic growth, the Government of India has from time to
time announced various schemes to support the development
of this sector. However, despite all these initiatives the MSMEs
faced various challenges which are hampering their growth
potential.

“Make in India”, the international marketing campaigning
slogan coined by the Prime Minister of India is attracting
businesses from around the world to invest and manufacture
in India. MSMEs market in India is very dynamic, and the
regulatory environment which governs MSMEs operations is
also constantly changing and, as a corollary, the demands
of business advisory services are being evolved. MSMEs
themselves are different in size, age, sector, location, and
growth profile and are run by owners, managers with different
capabilities and motivation. Such factors inevitably influence the
requirement of external services which are being sought from
Chartered Accountants.
In recent years, the MSME sector has consistently registered
higher growth rate compared to the overall industrial sector. The
major advantage of the sector is its employment potential at
low capital cost. The MSME sector falls under the jurisdiction of
the Ministry of Micro, Small and Medium Enterprises (Sukshma
Laghu Aur Madhyam Udyam Mantralaya), of the Government
of India.
The Micro, Small and Medium Enterprises Development Act, Micro Small and
2006 (27 of 2006) came into force from 2nd October, 2006.
The MSMED Act, 2006 provides for facilitating the promotion Medium Enterprises
and development and enhancing the competitiveness of MSME
and for matters connected therewith. The MSME have been (MSME) Sector
classified broadly in to two categories:

 Manufacturing;and
 Those engaged in providing/rendering of services.
Both categories of enterprises have been further classified
into MSME based on their investment in plant and machinery
(for manufacturing enterprises) or one equipment (in case of
enterprises providing or rendering services).

68 Quick Insights on Professional Opportunities for Chartered Accountants