Growth & Performance of Medium and Small Scale Industries

LOK SABHA SECRETARIAT PARLIAMENT LIBRARY AND REFERENCE, RESEARCH, DOCUMENTATION AND INFORMATION SERVICE (LARRDIS) MEMBERS REFERENCE SERVICE REFERENCE NOTE. No. 9/RN/Ref./2014 For the use of Members of Parliament Not for Publication Growth & Performance of Medium and Small Scale Industries ------------------------------------------------------------------------------------------------------------------------------------------------------- The reference material is for personal use of the Members in the discharge of their Parliamentary duties, and is not for publication. This Service is not to be quoted as the source of the information as it is based on the sources indicated at the end/in the text. This Service does not accept any responsibility for the accuracy or veracity of the information or views contained in the note/collection.

Growth & Performance of Medium and Small Scale Industries Micro, Small and Medium Enterprises (MSME) sector has emerged as a highly vibrant and dynamic sector of the Indian economy over the last five decades. MSMEs not only play crucial role in providing large employment opportunities at comparatively lower capital cost than large industries but also help in industrialization of rural and backward areas, thereby, reducing regional imbalances, assuring more equitable distribution of national income and wealth. MSMEs are complimentary to large industries as ancillary units and this sector contributes enormously to the socio-economic development of the country 1. 1. OVERVIEW OF MSME SECTOR Various developments that contribute in growth and performance of Micro, Medium & Small Scale Industries are as under: *Promulgation of Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 MSMED Act was notified in 2006 to address policy issues affecting MSMEs as well as the coverage and investment ceiling of the sector. The salient features of the Act include: Setting up of a National Board for MSMEs Classification of enterprises Advisory Committees to support MSMEs Measures for promotion, development and enhancement of MSMEs Schemes to control delayed payments to MSMEs Enactment of rules by State Governments to implement the MSMED Act, 2006 in their respective states 2 MSMED Act,2006 provides for classification of MSME as given below in table 3 : Classification Investment in plant and machinery Manufacturing sector Services sector Micro Upto Rs.25 lakh Upto Rs.10 lakh Small Above Rs.25 lakh & upto Rs.5 crore Above Rs.10 lakh & upto Rs.2 crore Medium Above Rs.5 crore & upto Rs.10 crore Above Rs.2 crore & upto Rs.5 1 Ministry of Micro, Small and Medium Enterprises, Annual Report 2012-13, p. 3 2 Ministry of Micro, Small and Medium Enterprises, Annual Report 2011-12, p. 13 3 Lok Sabha Unstarred Question No. 2238 dated 18.12.2013

-2- *Merging of Small Scale & Agro Industries Subsequent to enactment of Micro, Small and Medium Enterprises Development Act, 2006 by the Parliament, the President under Notification dated 9th May, 2007 has amended the Government of India (Allocation of Business) Rules, 1961. Pursuant to this amendment, Ministry of Agro and Rural Industries and Ministry of Small Scale Industries were merged into a single Ministry, namely, Ministry of Micro, Small and Medium Enterprises. *Khadi and Village Industries Commission Act, 1956 The Khadi and Village Industries Commission Act, 1956 has been comprehensively amended in 2006, introducing several new features to facilitate professionalism in the operations of the Commission as well as field- level formal and structured consultations with all segments of stakeholders. A new Commission has also been constituted in Nov.2011 *4 TH All India Census OF MSME The Government monitors the number of micro, small & medium Enterprises (MSMEs) in registered sector by conducting All India Census of the sector periodically. As per the latest census (Forth Census) conducted (with base reference year 2006-07), wherein the data was collected till 2009 & results published in 2011-12, the number of working MSMEs in registered sector is 15.64 lakh out of which 1.64 lakh are owned by SC/ST entrepreneurs 4. *Defining of Registered & Unregistered Sectors Registered Sector: Enterprises registered with District Industries Centre in the State/UTs., KVIC/ Khadi and Village Industries Board, Coir Board as on 31.03.2007 and factories under the coverage of section 2m(i) and 2m(ii) of the Factories Act 1948 used for Annual Survey of Industry having investment in plant and machinery up to Rs 10 crore were considered to belong to registered sector. (ii) Unregistered Sector: All enterprises engaged in the activities of manufacturing or in providing/rendering of services, not registered permanently or not filed EM with State Directorates of Industries/District Industries Centers on or before 31-3-2007 are called unregistered enterprises. Those enterprises that are temporarily registered on or before 31-3- 2007 as also the units that are temporarily or permanently registered or filed EM after 31-3- 2007 till the date of Sample Survey, conducted as part of Fourth All India Census of MSME, 2006-07 were treated as unregistered enterprises for the purpose of this survey. Enterprises found forming part of registered sector as defined above were excluded from the coverage of unregistered sector 5. 4 Initiatives of the Ministry of Micro Small and Medium Enterprises in Recent Years, www.msme.gov.in 5 op.cit., Annual Report 2011-12, p. 14

-3- Number of working enterprises in MSME sector, performance of SSI/MSME units, employment, investment and gross output are indicated in following tables. Table 1: Number of Enterprises in MSME Sector 6 Table 2: Performance of SSI/MSME units, employment, investment and gross output 7 Sl. No. Year Total Working Enterprise (In Lakh) Employment (In Lakh) Market Value of Fixed Assets (in crores) Gross Output (In Crore) 1. 2001-02 105.21 249.33 154349.00 282270.00 2. 2002-03 109.49 260.21 162317.00 314850.00 3. 2003-04 113.95 271.42 170219.00 364547.00 4. 2004-05 118.59 282.57 178699.00 429796.00 5. 2005-06 123.42 294.91 188113.00 497842.00 6. 2006-07 361.76 805.23 868543.79* 1351383.45* 7. 2007-08# 377.37 842.23 917437.46 1435179.26 8. 2008-09# 393.70 881.14 971407.49 1524234.83 9. 2009-10# 410.82 922.19 1029331.46 1619355.53 10. 2010-11# 428.77 965.69 1094893.42 1721553.42 11. 2011-12# 447.73 1012.59 1176939.36 1834332.05 The details of total number of working MSMEs in the country, State/UT-wise, as per 4th All India Census of MSMEs 2006-07 published in April 2011 are given in Annexure-I. Export from MSME Sector As per Directorate General of Commercial Intelligence and Statistics (DGCI&S) data, the 6 Ibid, p. 17 7 Ibid, pp. 15-16

-4- total exports from MSME sector during the last three years have been provisionally estimated as follows:- (in US$ million) Sl. No. Year MSME Exports 1. 2010-11 1,11,403 2. 2011-12 1,31,483 3. 2012-13 1, 28,162 The main markets of 20 most exported MSME product groups, which constituted more than 91% of MSME exports during 2010-13 included USA, European Union (EU), UAE, Australia, Turkey, Russia, Indonesia, Singapore, Srilanka, South Africa, Hong Kong, and Israel 8. The most exported 20 MSME products are listed below 9 : 1 Pearls, precious stones, metals, coins, etc 2 Electrical, electronic equipment 3 Pharmaceutical products 4 Articles of apparel, accessories, not knit or crochet 5 Articles of iron or steel 6 Machinery, boilers, etc 7 Articles of apparel, accessories, knit or crochet 8 Organic chemicals 9 Other made textile articles, sets, worn clothing etc 10 Vehicles other than railway, tramway 11 Plastics and articles thereof 12 Rubber and articles thereof 13 Footwear, gaiters and the like, parts thereof 14 Articles of leather, animal gut, harness, travel goods 15 Tanning, dyeing extracts, tannins, derivatives, pigments etc 16 Aircraft & spacecraft parts 17 Essential oils, perfumes, cosmetics, toileteries 18 Stone, plaster, cement, asbestos, mica, etc articles 19 Carpets and other textile floor coverings 20 Furniture, lighting, signs, prefabricated buildings 2. INITIATIVES OF THE MINISTRY OF MSME IN RECENT YEARS The Ministry of Micro, Small and Medium Enterprises has been implementing various schemes and programmes for promotion of Micro, Small and Medium Enterprise (MSMEs) at all India level mentioned as under: 8 Lok Sabha Unstarred Question No. 3311 dated 12.2.2014 9 Ibid

-5- I. Prime Minister s Employment Generation programme A national level credit linked subsidy scheme, namely, Prime Minister s Employment Generation Programme (PMEGP) was introduced in August 2008 by merging erstwhile PMRY and REGP schemes of this Ministry. Under this programme, financial assistance is provided for setting up of micro enterprises each costing up to Rs.10 lakh in service sector and Rs.25 lakh in manufacturing sector. The assistance is provided in the form of subsidy up to 25 per cent (35 per cent for Special category including weaker sections) of the project cost in rural areas while it is 15 per cent (25 per cent for Special category including weaker sections) for urban areas. During 2012-13, disbursements were made in 56,997cases utilizing Rs.1078.61 crore as margin money subsidy. The estimated employment generation is 4.28 lakh persons. An amount of Rs.1418.28 crore including Rs.1380 crore margin money subsidy has been provided in BE 2013-14 10. II. Procurement Policy for MSEs A Public Procurement Policy for MSEs was notified in March 2012. The policy envisages that every Central Ministry/PSU shall set an annual goal for procurement from the MSE sector with the objective of achieving minimum 20% of the total annual purchases from MSEs in a period of three years. Of this, 4% will be earmarked for procurement from MSEs owned by SC/ST entrepreneurs. The policy will help to promote MSEs by improving their market access and competitiveness through increased participation by MSEs in Government purchases and encouraging linkages between MSEs and large enterprises. III. Enhanced Credit Flow to the MSE Sector For strengthening the delivery of credit to the MSEs, the Government announced a Policy Package for Stepping up Credit to Small and Medium Enterprises (SME) in August 2005 for doubling the credit flow to this sector within a period of five years. This has resulted in a significant increase in the credit flow from Public Sector Banks (PSBs) to the micro and small enterprises (MSE) sector with the outstanding credit of public sector banks increasing from Rs.1,02,550 crore at the end of March 2007 to Rs.2,78,398 crore at the end of March 2010. It has further enhanced to Rs.3, 96,343 crore at the end of March 2012. With constant monitoring and efforts made by the Government, the credit flow from Public Sector Banks (PSBs) to the MSE sector has registered a growth of 47.4%, 26.6% and 45.4% during 2007-08, 2008-09 and 2009-10 respectively higher than the stipulated 20% in the Policy Package. The growth of credit during 2011-12and 2012-13 have been5%and 25% respectively. 11 IV. Credit Guarantee Scheme The Government has set up a Credit Guarantee Fund to provide relief to those micro and small entrepreneurs who are unable to pledge collateral security in order to obtain loans for the development of their enterprises. The guarantee cover provided is up to 75% of the credit facility 10 Initiatives of the Ministry of Micro Small and Medium Enterprises in Recent Years, www.msme.gov.in 11 Ibid

-6- up to Rs. 50 lakh (85% for loans up to Rs. 5 lakh provided to micro enterprises, 80% for MSEs owned/operated by Women and all loans to North East Region) with a uniform guarantee at 50% of the credit exposure above Rs. 50 lakh and up to Rs. 100 lakh. A composite all-in annual guarantee fee of 1.0 % per annum of the credit facility sanctioned (0.75% for credit facility up to Rs. 5 lakh and 0.85% for above Rs.5 lakh and up to Rs.100 lakh for women, micro enterprises and units in NER including Sikkim) is now being charged. As a result, the scheme has been able to overcome the initial inhibition of bankers and is steadily gaining in acceptance. Further, efforts made to enhance the awareness have led to the coverage of 14, 19,807 proposals (for guarantee cover for a sanctioned loan amount of Rs. 70026.28 crore)at the end of March 2014.The Government is making concerted efforts to further enhance the awareness of the scheme throughout the country for enhancing the coverage of the Scheme. V. Credit Linked Capital Subsidy Scheme The Ministry of Micro, Small and Medium Enterprises is operating a Scheme, namely, Credit Linked Subsidy Scheme (CLCSS) for technology up gradation of Micro and Small Enterprises (MSEs). The Scheme aims at facilitating technology up gradation of Micro and Small Enterprises by providing 15% Capital Subsidy (limited to maximum Rs. 15.00 lakh) for purchase of plant and machinery. Maximum limit of eligible loan for calculation of subsidy under Scheme is Rs. 100.00 lakh. Presently, 51 well established and improved technologies/sub- Sectors have been approved under the Scheme. For effective and transparent implementation of the Scheme, Ministry has started online Application and Tracking system w.e.f 01.10.2013 for online lodgment of subsidy claims by nodal banks. Since inception of the Scheme, 28,287 units have availed subsidy of Rs. 1,619.33 crore up to 31.03.2014. Under Credit Guarantee Scheme, changes in guarantee fee and annual service fee have been made by levying fee at consolidated rate of 1% per annum. Presently, collateral free / third party guarantee free loans / credits sanctioned by member banks/ institutions upto Rs.100 lakh are extended guarantees under Credit Guarantee Scheme 12. The State / UT-wise position regarding MSEs benefitted under these schemes during last three years and the current year is given at Annexure-II and III 13. VI. Micro & Small Enterprises Cluster Development Programme (MSE-CDP) The Micro and Small Enterprises Cluster Development Programme (MSE-CDP) is being implemented for holistic and integrated development of micro and small enterprises in clusters through Soft Interventions (such as capacity building, marketing development, export promotion, skill development, technology up gradation, organizing workshops, seminars, training, study visits, exposure visits, etc.), Hard Interventions (setting up of Common Facility Centers) and Infrastructure Development (create/upgrade infrastructural facilities in the new/existing industrial areas/ clusters of MSEs). 12 Ibid 13 Lok Sabha Unstarred Question No. 1111 dated 11.12.2013, Annexure

-7- VII. Technology Centre Systems Programme (TCSP) Ministry of Micro, Small and Medium Enterprises, Government of India have established 18 Technology Centers (TCs).The Technology Centers primary focus is to support industries particularly MSMEs in the country through access to advanced technologies & providing technical advisory support as well as skilled manpower by offering opportunities for technical skill development to the youth at varying levels ranging from School Dropouts to Graduate Engineers., Government is considering to upgrade and expand network of MSME Technology Centers at an estimated cost of Rs. 2200 crore with World Bank funding. VIII. Rajiv Gandhi Udyami Mitra Yojana The scheme aims to promote and support establishment of new micro and small enterprises through handholding of potential first generation entrepreneurs, who have already successfully completed Entrepreneurship Development Programme (EDP)/ Skill Development Programme (SDP) / Entrepreneurship-cum-Skill Development Programme (ESDP) of at least two weeks duration, or have undergone vocational training (VT) from ITIs. One of the main objectives of handholding is to guide and facilitate the potential entrepreneurs in dealing with various procedural and legal hurdles and completion in setting up their enterprises, more importantly, it will also enhance survival / success rate of newly set up enterprises. IX. Khadi Reform Development Programme (KRDP) In order to revitalize and reform the traditional khadi sector with enhanced sustainability of khadi, increased artisans welfare, increased incomes and employment opportunities for spinners and weavers with lesser dependence on Government grants, a Khadi Reform and Development Programme was formulated by the Ministry of MSME in consultation with Khadi and Village Industries Commission (KVIC), Asian Development Bank(ADB), Department of Economic Affairs (DEA) and M/s Price Waterhouse Coopers (PWC) 14. X. Workshed Scheme for Khadi Artisans Under this scheme, assistance is provided for construction of Work sheds for Khadi artisans for better work environment. Financial assistance of Rs.8.23 crore for establishment of work shed has been provided to 4444artisans in 2013-14. XI. Scheme for Enhancing Productivity & Competitiveness of Khadi Industry and Artisans A category khadi institutions of which 50 institutions would be those which are managed exclusively by beneficiaries belonging to Scheduled Castes/Scheduled Tribes to make them competitive with more market driven and profitable production by replacement of obsolete and old machinery and equipment. 14 Initiatives of the Ministry of Micro Small and Medium Enterprises in Recent Years

-8- XII. Scheme for Rejuvenation, Modernization and Technological Upgradation of Coir Industry Under the scheme being implemented since 2007-08, assistance is provided to spinners and tiny household sector for replacement of outdated ratts/looms and for constructing work sheds so as to increase production and earnings of workers. Year wise details of grants released by Ministry and units assisted during XI Plan are as under: XIII. Scheme of Fund for Regeneration of Traditional Industries (SFURTI) This Scheme was launched in 2005 for regeneration of traditional industries identified clusters in khadi, village industries and coir sectors with a view to make these industries more productive and competitive and increases the employment opportunities in rural and semi-urban areas. The objective of the Scheme is to establish a regenerated, holistic, sustainable and replicable model of integrated cluster- based development of traditional industries in khadi, village and coir sectors. So far 96 clusters (khadi- 29,- Village Industries 47 and Coir -20) have been developed under SFURTI. It is proposed to develop 800 clusters during the XII Plan 15. The funds are not allocated State-wise as all the plan schemes implemented by Ministry of Micro, Small and Medium Enterprises (MSMEs) are Central Sector Schemes. The total outlay allocated to Ministry of MSME for promotion of MSMEs sector during last three years i.e. 2010-11, 2011-12 and 2012-13 is Rs.2,400.00 crore, Rs.2,700.00 crore and Rs.2835.00 crore respectively 16. 3. ANNOUNCEMENTS FOR MSME SECTOR IN UNION BUDGET, 2013-14 Hon ble Union Finance Minister, while presenting Union Budget 2013-14 to the Parliament, made various announcements specifically for MSME sector as under: 15 Ibid 16 Rajya Sabha Unstarred Question No. 2238 dated 17.12.2013

-9- Micro, small and medium enterprises (MSME) have a large share of jobs, production and exports. Too many of them do not grow because of the fear of losing the benefits associated with staying small or medium. To encourage them to grow, the benefits or preferences enjoyed by them will now stay with them for up to three years after they grow out of the category in which they obtained the benefit. To begin with, the non-tax benefits would be made available to an MSME unit for three years after it graduates to a higher category. To provide greater support to MSMEs, the refinancing capability of SIDBI has been enhanced from the current level of Rs.5, 000 crore to Rs.10, 000 crore per year. SIDBI set up the India Microfinance Equity Fund in 2011-12 with budgetary support of Rs.100 crore to provide equity and quasi-equity to Micro Finance Institutions (MFI). An amount of Rs.104 crore has been committed to 37 MFIs. Earlier Rs.100 crore were allocated to the IME Fund in the budget and now another sum of Rs.100 crore has been provided in present budget for the Fund. The Factoring Act 2011 has been passed by Parliament. A provision of a corpus of Rs.500 crore to SIDBI has been made in the present budget to set up a Credit Guarantee Fund for factoring. Tool Rooms and Technology Development Centers set up by the Ministry of Micro, Small and Medium Enterprises have done well in extending technology and design support to small businesses. Finance Minister has proposed to provide, with World Bank assistance, a sum of Rs.2,200 crore during the 12 th Plan period to set up 15 additional Centers. Incubators play an important role in mentoring new businesses which start as a small or medium business. The new Companies Bill obliges companies to spend 2 percent of average net profits under Corporate Social Responsibility (CSR). The Ministry of Corporate Affairs will notify that funds provided to technology incubators located within academic institutions and approved by the Ministry of Science and Technology or Ministry of MSME will qualify as CSR expenditure. Appropriate action has been initiated by the concerned Govt. agencies for implementation of these announcements 17. 4. INTER -MINISTERIAL COMMITTEE FOR ACCELERATING MANUFACTURING IN MSME An Inter-Ministerial Committee for Accelerating Manufacturing in MSME was set up under the Chairmanship of Secretary (MSME). The Committee submitted its report in September 2013. The Committee has made a number of recommendations covering issues of regulation, finance, infrastructure, technology and market through the different stage of the life cycles of MSMEs 18. 17 Ibid 18 Ibid

-10-5. SMALL SCALE INDUSTRIES In India, small-scale industries (SSIs) occupy 12.3 million units, contribute to 40 per cent of their exports and provide employment to about 29.5 million people. The SSIs now produce more than 8000 products. By recognizing the importance of SSI units in the development of economy, the government has been continuously attempting to improve the availability of critical input to this sector and create appropriate infrastructural environment. Recently, significant policy initiatives have created easy availability of financial assistance, incentives and subsidies and influenced many enterprises to start SSIs. This has resulted in growth in the number of SSI units shown in Annexure IV 19. The Indian government has also given due importance to Small Scale Industries (SSIs) in the five-year plans because of their immense advantages. All five-year plans have stressed the need to develop SSIs in India. Today, the status of SSI is better than the past years 20. An outlay of Rs. 24124 crore has been earmarked for 12 th Five Year Plan for Ministry of Micro, Small and Medium Enterprises (MSME) which would be spent for the growth of MSME sector. The outlay of 12 th Five Year Plan is 109.8 per cent higher than the 11 th Five Year Plan allocation which was Rs. 11500 crore and from Rs. 52 million higher from the 1 st Five-Year Plan (1951-56) indicating the increased importance assigned to this sector 21. 6. GOVERNMENT OF INDIA S EFFORTS TO IMPROVE THE CONDITION OF SICK ENTERPRISES The process of liberlisation, privatisation and globalisation (LPG) posed several threats and challenges for SSIs in India. The SSI sector now faces problems such as fierce competition and natural threat to indigenous technology. As a consequence of this several SSIs flourished and several became sick 22. As per provisional data compiled by the Reserve Bank of India (RBI) the number of sick, micro, small and medium enterprises (MSMEs) in March, 2013 was 2,48,890. The Number of sick MSMEs in March 2013 has increased from 88,635 in March 2012 on account of revision of definition of sickness made by RBI in November 2012. The State/Union Terriroty-wise position of sick micro and small enterprises (MSEs) and sick medium enterprises is given at Annexure-V and VI respectively 23. As per the provisional RBI data, the outstanding credit to MSME sector in respect of scheduled commercial banks was Rs.8,55,658.52 crore at the end of March, 2013. 19 Op.cit, Facts for You, p. 15 20 Ibid, p. 16 21 Lok Sabha Unstarred Question No 3389 dated 12.2.2014 22 Op.cit, Facts for You, p. 16 23 Lok Sabha Unstarred Question No 186 dated 18.12.2013

-11- RBI in its circular issued on 1st November, 2012 has directed banks to provide nondiscretionary one time settlement (OTS) to non-viable sick MSEs. As per RBI data, 2,03,186 sick MSEs have been identified as potentially non-viable as at the end of March, 2013. The revised guidelines for rehabilitation of sick MSEs issued on 1st November, 2012 by RBI, inter alia, provide for: (i) Early detection of sickness; (ii) A viability study to form the basis of rehabilitation package to potentially viable sick MSEs; and (iii) A non-discretionary one time settlement (OTS) scheme for the MSE sector. Further, Small Industries Development Bank of India (SIDBI) has also introduced Management/ Restructuring of Stressed Assets and Rehabilitation Scheme for MSMEs. The Scheme provides for relief and concessions (in the form of re-schedulement, reduction in rate of interest, funding of overdue/ future interest and waiver etc.) as well as need based additional financial assistance for revival of MSME sick units. As per provisional data provided by RBI, 8836 sick MSEs have been identified as potentially viable of which 4,460 are under nursing as at the end of March, 2013 24. In this direction, certain products have been put under the list of items reserved for exclusive manufacture in the MSME sector to protect and promote it. 20 items are reserved for Micro and Small enterprises (earlier small scale sector) for exclusive manufacture by MSE with the objective of their development and promotion by following the criteria laid down in sub-section 2(c) of Section 29 B of the Industries (Development and Regulation) Act 1951. The list of items is given below 25 : S. No. S. No. Product Code Name of the Product (As per Gazette Notification) 20-21 FOOD AND ALLIED INDUSTRIES 1. 3 202501 Pickles & chutneys 2. 7 205101 Bread 3. 11 21100102 Mustard Oil (except solvent extracted) 4. 13 21100104 Ground nut oil (except solvent extracted) 5. 27 WOOD AND WOOD PRODUCTS 6. 47 276001 Wooden furniture and fixtures 7. 28 PAPER PRODUCTS 8. 79 285002 Exercise books and registers 9. OTHER CHEMICALS AND CHEMICAL 24 Lok Sabha Unstarred Question No. 186 dated 18.12.2013 25 Lok Sabha Starred Question No. 309 dated 12.2.2014

-12- PRODUCTS 10. 253 305301 Wax candles 11. 308 314201 Laundry soap 12. 313 317001 Safety matches 13. 314 318401 Fire works 14. 319 319902 Agarbatties 15. GLASS AND CERAMICS 16. 335 321701 Glass bangles 17. 33-35 MECHANICAL ENGG. EXCLUDING TRANSPORT EQUIPMENT 18. 364 340101 Steel almirah 19. 394 341004 Rolling shutters 20. 402 34200602 Steel chairs-all types 21. 404 34200702 Steel tables-all other types 22. 409 342099 Steel furniture-all other types 23. 428 343302 Padlocks 24. 447A 345207 Stainless steel utensils 25. 474 345202 Domestic utensils-aluminium In the light of above mentioned status of growth and performance of MSME sector, today there is an urgent need to recognize two other areas that merit the government s attention are: tax incentives to MSMEs; and skills development initiatives for the sector. The industry view is that tax break to the order of 50% of income tax liability will greatly augment the growth prospects of manufacturing MSMEs. A friendly tax regime for rental and leasing of capital goods to SMEs with exemption from service tax will be of the essence to these enterprises. On the skills development front, the government could leverage the knowledge and resources of national and regional industry bodies to support skill upgradation programmes for MSMEs operating in remote areas 26. Recent Development in MSME Sector Recently, the Global Investor Summit was held in Madhya Pradesh at its commercial capital Indore from 8-10 October 2014. As many as 32 countries participated, nine of these were partnership countries, 28 ambassadors from different countries attended the Summit. The Summit was also attended by the Prime Minister, Shri Narendra Modi. During his speech, he said, Investment worth $100 billion from Japan, China and America have applied for visa. Now it is the turn of the states to capitalize on the opportunity. The States which are ready can walk away with a major share. The focus sectors of the Convention were agree-business and food processing, automobile and engineering, health care, industrial infrastructure, IT/ITes, pharmaceuticals, renewable energy, technical education and skilled development, textile and handlooms, tourism and urban development. 26 Financial Express, New Delhi, dated 23.4.2014, Editorial

-13- In the wake of rising opportunities in MSME sector and young brains ready to take the big plunge in entrepreneurial world, the Chief Minister of Madhya Pradesh, Shri Shivraj Singh, announced that Madhya Pradesh will have a separate department of MSME and Small Scale Industries and it will be led by the CM himself and revealed that MSME investors would now need to file the return only twice which were earlier 13. This was to ensure to eliminate redtapism. The union government also extended its support to the state and Union Minister for Micro and Small Industries Shri Kalraj Mishra announced that 40 incubation centres will be set up in Madhya Pradesh to train entrepreneurs along with a tool room costing Rs. 150 crore in which technically educated entrepreneurs will be imparted training. The Chief Minister said that posttraining these skilled manpower can avail Rs. 100 crore venture funds which can be loaned to a prospective investor by way of equality and can be recouped later when the industry stands on its own. Twenty per cent of land will be reserved for MSMEs to that MSME entrepreneur do not face land shortage. Symbiosis and Siemens evinced interest in skill development programme. The partner countries like Canada, Czech Republic and Peru, evinced interest in working in the field of energy, infrastructure, automobile, mining, agriculture and education 27. Conclusion MSMEs need support not just at the start-up stage but also for dealing with intractable issues like bankruptcy. There is a need for an Expert Advisory Group that can lay down requisite procedures and push for amendments to the existing laws to facilitate restructuring or closure of distressed MSME units. The Indian MSME sector is poised for rapid growth and integration with major global value chains. Timely policy intervention and due support will go a long way toward making Indian MSMEs globally competitive 28. 27 Economic Times, New Delhi dated 13.10.2014 28 Financial Express, New Delhi, dated 23.4.2014, Editorial

-14- STATE - WISE DISTRIBUTION OF WORKING MSMEs Sl. No. Name of State/UT No. of Enterprises (In lakhs) 1 Andaman & Nicobar Islands 0.14 2 Andhra Pradesh 25.96 3 Arunachal Pradesh 0.41 4 Assam 6.62 5 Bihar 14.70 6 Chandigarh 0.49 7 Chhattisgarh 5.20 8 Dadra & Nagar Haveli 0.09 9 Daman & Diu 0.06 10 Delhi 5.52 11 Goa 0.86 12 Gujarat 21.78 13 Haryana 8.66 14 Himachal Pradesh 2.87 15 Jammu & Kashmir 3.01 16 Jharkhand 6.75 17 Karnataka 20.19 18 Kerala 22.13 19 Lakshadweep 0.02 20 Madhya Pradesh 19.33 21 Maharashtra 30.63 22 Manipur 0.91 23 Meghalaya 0.88 24 Mizoram 0.29 25 Nagaland 0.39 26 Odisha 15.73 27 Puducherry 0.35 28 Punjab 14.46 29 Rajasthan 16.64 30 Sikkim 0.17 31 Tamil Nadu 33.13 32 Tripura 0.98 33 Uttar Pradesh 44.03 34 Uttarakhand 3.74 35 West Bengal 34.64 ALL INDIA 361.76 Annexure-I Source: Rajya Sabha Unstarred Question No. 1351 dated 17.12.2013

-15- State/UT-wise number of units availed subsidy under Credit Linked Capital Subsidy Scheme (CLCSS) during last three years and current year Annexure-II (Subsidy in Rs. lakh) Financial year/ State/UT 2010-11 2011-12 2012-13 2013-14 (upto 30.11.13) No. of Units Subsidy No. of Units Subsidy No. of Units Subsidy No. of Units Subsidy 1 Andhra Pradesh 187 1577.8 202 1823.7 176 1656.03 77 815.7594 2 Andaman & Nicobar 0 0.0 0 0.0 0 0 0 0 3 Arunachal Pradesh 0 0.0 0 0.0 0 0 0 0 4 Assam 0 0.0 0 0.0 1 15 0 0 5 Bihar 3 24.7 2 5.6 1 3.75 1 3.09749 6 Chandigarh 23 145.0 14 79.5 18 87.5581 38 182.5948 7 Chhattisgarh 9 91.5 7 41.0 23 215.806 14 110.7647 8 Dadra & Nagar Haveli 5 51.4 2 30.6 3 33.11 1 3.43 9 Daman & Diu 2 24.9 2 25.7 8 57.055 15 93.1162 10 Goa 7 25.5 4 7.7 3 21.79 3 29.34 11 Gujarat 730 4492.2 937 5321.6 2225 10939.4 1196 7306.766 12 Haryana 160 1287.8 190 1750.5 256 2023.53 203 1569.308 13 Himachal Pradesh 1 15.0 1 2.1 7 32.76 2 18.08 14 Jammu & Kashmir 1 1.0 0 0.0 0 0 1 7.155 15 Jharkhand 27 200.7 7 59.6 22 167.283 16 91.77811 16 Karnataka 593 3106.6 408 2145.9 460 2604.16 232 1308.644 17 Kerala 23 179.3 17 161.6 36 273.833 18 138.9869 18 Lakshadweep 0 0.0 0 0.0 0 0 0 0 19 Madhya Pradesh 27 210.9 28 239.2 35 290.511 34 312.2499 20 Maharashtra 370 2307.8 337 2280.2 665 4652.05 612 4181.785 21 Manipur 0 0.0 0 0.0 0 0 0 0 22 Meghalaya 0 0.0 0 0.0 0 0 0 0 23 Mizoram 0 0.0 0 0.0 0 0 0 0 24 Nagaland 0 0.0 0 0.0 0 0 0 0 25 Delhi 60 461.6 43 344.3 53 490.432 40 370.1417 26 Orissa 83 394.4 27 185.0 26 217.075 7 86.75427 27 Puducherry 1 2.0 6 59.3 4 14.31 2 12.42 28 Punjab 448 2927.3 305 2048.9 615 4048.53 266 1818.539 29 Rajasthan 175 1109.7 221 1656.2 303 1812.82 240 1437.543 30 Sikkim 0 0.0 0 0.0 0 0 0 0 31 Tamil Nadu 934 4501.7 418 2333.7 655 3602.72 317 1783.608 32 Tripura 0 0.0 0 0.0 0 0 0 0 33 Uttar Pradesh 84 593.0 51 383.2 89 674.051 61 459.7896 34 Uttarakhand 2 6.4 2 30.0 9 64.7375 1 3.3 35 West Bengal 29 279.6 17 151.3 21 198.171 7 88.72 Total 3984 24017.7 3248 21166.3 5714 34196.4 3404 22233.67 Source: Lok Sabha Unstarred Question No. 1111 dated 11.12.2013

-16- Annexure-III State/UT -wise Guarantees Approved under Credit Guarantee Scheme during last three years and current year 2010-11 2011-12 2012-13 2013-14 (April-November,2013) Name of the State / Union Territory No. of Guarantees approved Guarantee Approved amount (Rs. in lakh) No. of Guarantees approved Guarantee Approved amount (Rs. in lakh) No. of Guarantees approved Guarantee Approved amount (Rs. in lakh) No. of Guarantee s approved Guarantee Approved amount (Rs. in lakh) Andaman & Nicobar 188 679.56 202 810.36 214 1,118.17 272 1,661.68 Andhra Pradesh 7,384 43,461.40 8,946 55,762.50 21,536 69,497.79 14,856 47,126.84 Arunachal Pradesh 374 1,704.80 572 2,662.60 583 3,921.87 622 3,799.53 Assam 9,492 29,074.58 12,046 41,157.67 10,649 39,504.86 11,618 41,636.12 Bihar 9,784 38,785.42 14,512 60,494.80 21,626 81,945.80 17,902 80,412.01 Chandigarh 547 3,555.27 283 2,743.19 425 3,988.73 403 4,694.89 Chhattisgarh 2,463 14,070.81 3,507 18,204.62 3,859 29,230.41 2,643 22,815.95 Dadra & Nagar Haveli 34 853.84 36 768.91 55 1,176.77 68 1,378.10 Daman & Diu 36 687.00 29 932.88 55 1,378.84 39 731.28 Delhi 2,503 31,111.99 2,666 31,644.24 2,640 41,101.89 2,268 32,546.57 Goa 1,802 11,209.83 2,394 20,536.27 1,910 10,618.46 1,292 7,672.11 Gujarat 12,326 99,190.43 12,532 115,425.46 10,512 106,339.33 8,077 76,937.13 Haryana 2,836 26,421.58 2,230 22,668.61 3,408 33,964.61 2,602 25,209.47 Himachal Pradesh 7,020 43,828.32 5,269 32,057.71 5,286 29,659.94 3,684 23,331.40 Jammu & Kashmir 1,783 7,198.56 2,446 9,805.61 7,298 17,240.73 11,121 17,937.42 Jharkhand 7,691 49,775.94 10,434 66,536.71 13,465 83,543.45 11,921 67,245.48 Karnataka 19,183 87,246.86 24,105 115,237.27 25,070 127,544.73 18,749 102,540.02 Kerala 20,153 54,058.32 22,718 54,997.69 24,670 69,977.95 19,877 55,103.70 Laksha Dweep 41 83.96 18 35.72 43 77.61 38 115.02 Madhya Pradesh 7,444 37,875.29 6,208 39,518.36 8,415 54,858.97 7,000 45,730.00 Maharashtra 14,476 118,904.23 13,550 137,015.61 16,923 180,048.91 12,287 135,383.31 Manipur 166 437.66 394 1,705.85 712 3,444.00 1,297 4,537.65 Meghalaya 970 3,840.36 1,073 5,764.33 906 5,594.11 904 4,434.16 Mizoram 148 539.35 361 1,554.83 401 2,027.16 602 2,753.44 Nagaland 163 1,013.48 534 2,328.69 454 2,983.61 623 2,413.86 Orissa 13,924 63,050.33 14,374 64,976.87 16,512 64,599.31 11,802 46,415.80 Puducherry 148 842.72 631 2,495.15 455 2,065.04 187 1,530.87 Punjab 4,830 37,797.89 4,472 33,209.24 7,200 43,473.07 3,719 31,835.11 Rajasthan 9,191 42,963.53 6,969 42,844.09 7,661 60,298.39 5,846 43,977.98 Sikkim 178 949.32 128 676.02 343 1,186.75 214 713.02 Tamilnadu 25,172 90,716.88 14,380 93,786.41 23,513 137,360.62 29,546 102,867.22 Tripura 1,211 3,538.62 1,835 6,730.04 1,614 6,706.68 1,228 4,015.00 Uttar Pradesh 37,380 141,783.71 30,279 142,879.25 28,383 152,208.11 22,960 120,841.10 Uttarakhand 3,881 20,622.97 3,539 18,555.73 3,780 22,657.66 2,765 16,012.91 West Bengal 24,977 91,488.14 17,028 83,297.49 16,303 89,102.95 15,402 83,863.98 Grand Total 249,899 1,199,362.95 240,700 1,329,820.78 286,879 1,580,447.27 244,434 1,260,220.11 Source: Lok Sabha Unstarred Question No. 1111 dated 11.12.2013

-17- State/ UT Code State-Wise Distribution of Registered Working Small Scale Enterprises State/UT Name No of Enterprises Employment Original value of plant & machinery (in Rs. crore) Annexure-V Market value of fixed investment (in Rs. crore) 01 JAMMU & KASHMIR 14993 90158 557.65 7364.92 02 HIMACHAL PRADESH 11931 65148 741.7 3085.72 03 PUNJAB 48110 415838 3825.13 22864.79 04 CHANDIGARH 996 11705 61.86 424.92 05 UTTARAKHAND 23765 79941 801.97 3436.46 06 HARYANA 33150 381774 3179.08 18970.53 07 DELHI 3754 58123 360.8e7 2464.25 08 RAJASTHAN 54885 341690 3832.87 16158.73 09 UTTAR PRADESH 187742 754908 4829.37 33666.01 10 BIHAR 50036 147775 491.84 3674.46 11 SIKKIM 122 1159 10.83 27.82 12 ARUNACHAL PRADESH 417 5411 31.22 543.78 13 NAGALAND 1332 16281 111.23 718.33 14 MANIPUR 4492 19960 41.73 96.76 15 MIZORAM 3715 26032 91.57 296.95 16 TRIPURA 1343 23166 94.24 326.57 17 MEGHALAYA 3010 12701 63.55 134.54 18 ASSAM 19864 210507 1070.39 5867.4 19 WEST BENGAL 43259 360255 2470.04 11379.38 20 JHARKHAND 18190 75134 674.19 3546.65 21 ORISSA 19606 173088 1041.89 5361.55 22 CHHATTISGARH 22768 75094 579.64 2193.57 23 MADHYA PRADESH 106997 298047 1697.28 6834.2 24 GUJARAT 229830 1244981 42099.26 151868.8 25 DAMAN & DIU 594 25518 326.81 1863.6 26 DADRA & NAGAR HAVELI 1716 26476 46.97 178.96 27 MAHARASHTRA 86586 1088790 12384.89 54365.37 28 ANDHRA PRADESH 45692 382977 3641.84 11752.16 29 KARNATAKA 136186 789359 4608.04 14818.73 30 GOA 2621 33330 404.42 3250.39 31 LAKSHADWEEP 2 2 0 0 32 KERALA 150188 621423 3408.9 17217.1 33 TAMIL NADU 233881 1426056 11112.59 43296.16 34 PUDUCHERRY 1451 21086 310.57 1051.48 35 ANDAMAN & NICOBAR ILS. 750 5593 20.18 37.33 All India 1563974 9309486 105024.61 449138.40 Source: Lok Sabha Unstarred Question No. 2238 dated 18.12.2013

-18- Annexure-V State/Union Territory-wise number of sick MSEs Sl. No. State/UT Number of sick MSEs at the end of March 2011 2012 2013 (Provisional) 1. Andhra Pradesh 11305 3848 12044 2. Arunachal Pradesh 109 0 74 3. Assam 506 598 1710 4. Bihar 4872 5633 5502 5. Chhattisgarh 1052 594 2954 6. Goa 155 109 189 7. Gujarat 4321 6257 20220 8. Haryana 344 2976 3299 9. Himachal Pradesh 575 516 1901 10. Jammu & Kashmir 1631 1202 1283 11. Jharkhand 1476 2201 4624 12. Karnataka 7034 5655 15393 13. Kerala 5363 5425 8373 14. Madhya Pradesh 8124 3331 41854 15. Maharashtra 8815 10136 31322 16. Manipur 23 143 148 17. Meghalaya 276 18 64 18. Mizoram 7 38 159 19. Nagaland 23 8 147 20. Orissa 4967 5899 11488 21. Punjab 1478 1597 3584 22. Rajasthan 1743 5188 20253 23. Sikkim 21 38 63 24. Tamil Nadu 7106 8301 22886 25. Tripura 13 12 16 26. Uttarakhand 362 305 19046 27. Uttar Pradesh 4674 5366 3448 28. West Bengal 7904 8816 11737 29. Andaman & Nicobar Islands 8 8 68 30. Chandigarh 147 55 620 31. Dadra & Nagar Haveli 0 1 22 32. Daman & Diu 0 17 25 33. Delhi 4250 1150 2585 34. Lakshadweep - - 0 35. Puducherry 1457 150 188 All-India 90141 85591 247289 Source: Lok Sabha Starred Question No. 186 dated 18.12.2013

-19- Annexure-VI State/Union Territory-wise number of sick medium enterprises Sl. No. State/UT Number of sick medium enterprises at the end of March 2011 2012 2013 (Provisional) 01. Andhra Pradesh 86 136 214 02. Arunachal Pradesh 0 0 1 03. Assam 1 6 26 04. Bihar 28 112 52 05. Chhattisgarh 3 168 14 06. Goa 3 0 0 07. Gujarat 130 117 156 08. Haryana 123 41 24 09. Himachal Pradesh 231 27 20 10. Jammu & Kashmir 148 62 6 11. Jharkhand 7 15 14 12. Karnataka 154 116 211 13. Kerala 19 36 47 14. Madhya Pradesh 50 430 33 15. Maharashtra 168 144 152 16. Manipur 0 0 0 17. Meghalaya 10 0 0 18. Mizoram 3 0 0 19. Nagaland 0 0 0 20. Orissa 18 33 24 21. Punjab 230 186 32 22. Rajasthan 3 167 7 23. Sikkim 0 0 0 24. Tamil Nadu 113 142 92 25. Tripura 19 0 0 26. Uttarakhand 6 9 55 27. Uttar Pradesh 19 122 3 28. West Bengal 459 297 265 29. Andaman & Nicobar 0 0 0 Islands 30. Chandigarh 4 17 35 31. Dadra & Nagar Haveli 0 0 0 32. Daman & Diu 0 1 0 33. Delhi 82 660 116 34. Lakshadweep - - 0 35. Puducherry 0 0 2 All-India 2117 3044 1601 Source: Lok Sabha Starred Question No. 186 dated 18.12.2013