What is MSME in Entrepreneurship

Imagine a buzzing marketplace with shops, stalls, and workshops each with a unique story to tell. Every entity has its tale of ambition, resilience, and innovation. All of this makes these small enterprises powerful in their rights. It is surprising how these Micro, Small, and Medium enterprises (MSMEs) drive growth, create jobs, and nurture their passion. In this blog let us explore the might of the uncelebrated champions of business that shape the economy significantly.

What is MSME entrepreneurship?

Micro, Small, and Medium Enterprises (MSMEs) are units that produce, manufacture, and process goods and commodities. The government of India first introduced the concept of MSME through the Micro, Small & Medium Enterprises Development (MSMED) Act, 2006.

What is the Classification of MSMEs in entrepreneurship?

MSMEs are classified according to their turnover and investment. The classifications as per the Aatma Nirbhar Bharat Abhiyan Scheme in 2020 are given in the table below:

What is the Role of Micro, Small and Medium Enterprises (MSME) in Entrepreneurship Development?

Some of the roles are described below:

1. Provide Employment: This is an opportunity when additional employment can be generated. MSM Es are labour intensive so they involve maximum men and women and employ the agricultural sector in India. Usually, the farmers and landless labourers remain unemployed for a part of the year and it is good that the Micro, Small, and Medium Enterprises (MSME) can employ them for their work.
2. Variety of Products: A whole gamut of products is offered by SMES for the use of masses like stationery, readymade garments, plastic and rubber goods, soaps, detergents, etc. 

3. Improves Economic Condition: MSMEs improve the economic condition of people around it as more and more people are employed. They usually are established in rural and semi-urban areas and mostly belong to the economically poor section of the society.
4. Low Cost of Production: Simple products with the help of simple technology and local resources like labour and materials, lower the cost of production in MSME. This creates a sustainable model for the enterprise as well.
5. Promotion of Artistic and Creative Sense: MSMEs are platforms where the artistic and creative sense of rural people come forth and are nurtured for betterment. MSMEs ensure that the natural products and the actual rural sense of using them is promoted widely.
6. Rural Development: The establishment of MSMEs around economically weaker sections ensures improvement in many things like infrastructure, health facilities, safe drinking eaters, etc forging sustained growth and regional differences.
7. Mobilisation of Local Resources: The establishment of more MSMEs can help in the maximum utilisation of local resources like entrepreneurship skills, small savings, or natural resources around rural areas.

What is small business entrepreneurship?

A business that functions on a small scale and involves less capital, less labour, and fewer machines to operate is known as small business entrepreneurship.

Small-scale industries produce goods and services on a small scale and they play an important role in the economic development of a country. For a small-scale industry, the owner’s investments are one time for less than a crore for machinery or plants or take a lease or hire purchase. Some small-scale industries include bakeries, candles, local chocolates, pens, paper etc.

Read More: Small Business Ideas

What are the Characteristics of Small-business entrepreneurship?

Some of the characteristics have been discussed below:

• Ownership: Owned by a single owner therefore also a sole proprietorship.
• Management: The owner controls the management
• Limited Reach: Their products or services have a limited reach as their area of operation is restricted. There might be a local shop or an industry located nearby in the area.
• Labour Intensive: As labour and manpower dependency is high in the small-scale industry, the focus on technology is much diminished.
• Flexibility: Owing to their smaller operations, they’re open and flexible to sudden changes
• Resources: The small-scale industries save on natural resources by optimum utilisation of available resources.

How does the Study of management principles apply to a small-scale industry?

Here is a concise overview of how management principles can be tailored to the specific needs and challenges of a small-scale industry: 

Conclusion

MSMEs in entrepreneurship are a driver of growth and innovation in economic progress. They face several challenges like partial access to capital and market competition, but MSMEs thrive by leveraging their dexterity and customer relationships. Supporting and fostering MSMEs will bring about sustained economic development and a more inclusive business network. 

FAQs

Q1. What are the important facts about MSME?

Ans. As of 2024, the Micro, Small, and Medium Enterprises (MSMEs) sector in India has made significant contributions to the economy. MSMEs account for about 30% of India's GDP. They play an important role in employment, providing jobs to over 123.6 million people, which represents 62% of the overall employment in the country.

Q2. Who is eligible to register under MSME?

Ans. An individual cannot apply for MSME registration. A proprietorship, partnership firm, company, trust, or society with an investment below Rs.50 crore and annual turnover below Rs.250 crore is eligible for MSME registration.

Q3. Is GST compulsory for MSME?

Ans. The GST number is not mandatory for the MSME registration process. However, enterprises or businesses whose annual turnover is above ₹40 lakhs are taxable entities.

Q4. Who funds MSME?

Ans. The Ministry of Micro, Small and Medium Enterprises and Small Industries Development Bank of India (SIDBI), established a Trust named Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to implement the Credit Guarantee Fund Scheme for Micro and Small Enterprises.