“MSME”

“EMERGING MSME SECTORS IN INDIA AND THEIR

FUTURE PROSPECTS”

JUNE 21, 2022

BANK OF BARODA
SK PURI BRANCH

“EMERGING MSME SECTORS IN INDIA AND THEIR

 FUTURE PROSPECTS”
A PROJECT REPORT

SUBMITTED BY:

VRITANT RAJ
BBA2020116

BACHELOR’S OF BUSINESS ADMINISTRATION

ST. XAVIER’S COLLEGE OF MANAGEMENT AND TECHNOLOGY PATNA

ARYABHATTA KNOWLEDGE UNIVERSITY PATNA

 Table of Contents
1. Letter of Undertaking

2. Internship certificate

3. Acknowledgement

4. Abstract

5. Organization Profile

* Bank Of Baroda

* St. Xavier‘s College of Management & Technology

* Aryabhatta Knowledge University

6. MSME introduction

7. Slab Rate of MSME

8. New definition of MSME

9. Growth and Future Prospects of MSME in India

10. SWOT Analysis

11. Conclusion
12. References
 Acknowledgement

I thank almighty God who has provided me the faculty of learning and understanding the phenomenon
occurring around me. I wish to express my sincere thanks to my parents for their tremendous
contribution and support both morally and financially towards the completion of this project. It gives me
immense pleasure to express my sincere gratitude to my faculty guide Mr. Piyush Ranjan Sahay for
helping me in shaping this research project. His support and encouragement helped me to strive towards
the best of my potentials. I also take this opportunity to express my gratefulness to all the faculty
members of the BBA department at St’ Xavier‘s College of Mgmt. & Tech., Patna for their help and
support. I would like to deeply thankful to Bank of Baroda SK Puri Branch Patna for selecting me as a
summer intern. I wish to place on record, my deep gratitude to Santosh Kmar sir for their support in this
project and for being inspiring mentors and solving every little query I had. I gained immensely from
doing this project. It has contributed greatly towards increasing my learning curve, both at the theoretical
and practical level. the preparation of this project. I would like to thank all the respondents without their
kind co-operation this project would not have been possible. Last but not the least, I wish to place on
record, my deep gratitude to Fr. Dr. Martin Poras SJ., principle of St. Xavier’s College of Mgmt. &
Tech., Patna for providing us an opportunity to study in this premier institute of learning.
 Abstract

In recent years, the significance of MSME has been recognized in the world’s countries for its major
contribution in various socio-economic objectives such as higher economic growth and employment,
output, nurturing entrepreneurship and encouragement and support for exports. MSME play a vital role in
the industrial development of any country. The MSME sector is a backbone of Indian economy for its
contribution to growth of Indian economy. This sector is very much important for moves towards a faster
and inclusive growth of country. The MSME sector can help for achieving the target of Nation
Manufacturing Policy that manufacturing should contribute 25% in India’s GDP by 2022. For that
purpose, the government of India has taken a good initiative of “Make in India”. This paper is to focus on
performance of MSME & growth and opportunities. It is concluded that this sector significantly
contributes in employment, exports and manufacturing output.
 Organization Profile

BANK OF BARODA-
Bank of Baroda is an Indian state-owned International banking and

financial services company headquartered in Vadodara (earlier known as Baroda) in Gujarat,

India.

Maharaja Sayajirao Gaekwad III

The founder of Bank of Baroda

The bank was founded by the Maharaja of Baroda, Maharaja Sayajirao Gaekwad III on
20 July 1908. The bank, along with 13 other major commercial banks of India,

In 1908, Sayajirao Gaekwad III, set up the Bank of Baroda (BoB),[7] with other stalwarts of industry
such as Sampatrao Gaekwad, Ralph Whitenack, Vithaldas Thakersey, Tulsidas Kilachand and NM
Chokshi.[8] Two years later, BoB established its first branch in Ahmedabad. The bank grew
domestically until after World War II. Then in 1953 it crossed the Indian Ocean to serve the
communities of Indians in Kenya and Indians in Uganda by establishing a branch each in Mombasa and
Kampala. The next year it opened a second branch in Kenya, in
Nairobi, and in 1956 it opened a branch in Tanzania at Dar-es-Salaam. Then in 1957, BoB took a big
step abroad by establishing a branch in London. London was the center of the British Commonwealth
and the most important international banking center. In 1958 BoB acquired Hind Bank (Calcutta; est.
1943), which became BoB's first domestic acquisition

Bank of Baroda (BOB) established on July 20, 1908 is an Indian state-owned banking and financial
services organization, headquartered in Vadodara (earlier known as Baroda), in Gujarat, India. Under the
‘Alternative Mechanism’ scheme, the Government announced the amalgamation of Vijaya Bank and
Dena Bank with Bank of Baroda which came into effect on April 1, 2019.

Bank of Baroda is one of India’s largest banks with a strong domestic presence spanning 9,449 branches,
and 13,153 ATMs and Cash Recyclers supported by self-service channels as of Sep’19. The Bank has a
significant international presence with a network of 100 branches/ offices subsidiaries, spanning 21
countries. Moreover, Bank of Baroda has a state-of-the- art technology and offers a wide range of
alternate delivery channels such as net banking, mobile banking, e-lobbies etc. to ensure superior
customer convenience. The Bank has
6 wholly owned domestic subsidiaries namely BOB Financial

Solutions Limited (erstwhile BOB Cards Ltd.), BOB Capital Markets Ltd, Baroda Asset Management India
Limited, Baroda Trustee India Private Limited,

BarodaSun Technologies Ltd and Baroda Global Shared Services Limited. Bank of Baroda also has joint
ventures with India First Life Insurance Company Limited for life insurance and India Infradebt Limited
engaged in infrastructure financing. The Bank owns 98.57% in The Nainital Bank. The Bank has also
sponsored three Regional Rural Banks namely Baroda Uttar Pradesh Gramin Bank, Baroda
Rajasthan Gramin Bank and Baroda Gujarat Gramin Bank. As of end Sep’19,

BOB’s global business touched a level of Rs 15,31,470 crore, of which the domestic business was Rs
13,16,666 crore and overseas business was Rs 2,14,804 crore
 II. St. Xavier’s College of management and Technology

St. Xavier‘s College of management and Technology under Aryabhatta Knowledge

University was established in 2012. It offers life-oriented and professional courses. St.

Xavier‘s College is a co-educational undergraduate college of Arts and Commerce under

Magadh University, Bodh Gaya, started in July 2009 at its temporary College Campus at Digha. In June
2011, the college was shifted to its present location on a sprawling 36acre campus at X.T.T.I on Digha
Ashiyana Road. Both colleges are managed by the Jesuits of Bihar. Jesuits are the members of a
Christian religious Order called the Society of Jesus. Jesuit education is inspired by the life and
teachings of Jesus Christ and on the principles of pedagogy elaborated by St. Ignatius of Loyola, the
founder of the Society of Jesus. The College aims to offer an all-round formation that is intellectual,
cultural, social, emotion al, physical, aesthetic, moral and spiritual It further aims at promoting values
such as respect for common Indian cultural heritage, egalitarianism, democracy, secularism, equality of
sexes, protection of environment, removal of social barriers, responsible use of cybernetics and mass 21
media, transparency and probity in private and public life, national unity and respect for religious and
moral values. The College Emblem contains the motto of the College: Pravahito Gyanganga Pravah:-
Let the streams of Gyan Ganga keep on flowing. The College is situated near the river Ganga. Like the
flowing river, the
 College is to ensure that the streams of Gyan keep on flowing and liberating people. The Sun with the
letters IHS (first three letters for JESUS in Greek) is a symbol characterizing the Society of Jesus. The
emblem within the emblem, containing crown, crescent moon, etc. is the coat of arms of the noble
family of our patron, St. Francis Xavier

.
 III. Aryabhatta Knowledge University

The Aryabhatta Knowledge University Act 2008 provides for the establishment of university at Patna to
conduct and facilitate affiliation of institutions in the conventional as well as frontiers of professional
education. All colleges and instructions imparting professional education for example Engineering and
Technology including Information Technology, Nano technology &
Biotechnology, Management, Medicines, Health Technology, Public Health Pharmacy, Optometry,
Nursing, Education, Law etc. is to be affiliated to this university. Aryabhatta Knowledge University
(AKU), Patna has been established by Government of Bihar for the Development and Management of
Educational Infrastructure related to Technical, Medical, Management and allied professional education
in the state. The objective of the university is to promote the professional education infrastructure of
meet the national standard through well advanced Couse, infrastructure and quality faculty. Bihar lacks
in the infrastructure both on the term of number of intuitions and the quality of education. As a result
Bihar State has become the major hub of student migrating to the other states for pursuing their
education and carrier building for future growth.
The vision of this University is to mould the character, shape the career, and bring perfection in behavior
and excellence in educating the young generation of today for future. Also, to bring up a vibrant
knowledge university resonating with the mission of all round development of students in particular and
the national and mankind in general by providing value-based creative, innovative quality education.
Micro,
Small and
Medium Enterprises

What is MSME? – An Introduction

MSME stands for Micro, Small, and Medium Enterprises. 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

❖ Features of MSMEs

Here are some of the essential features of MSMEs

1. MSMEs are known to provide reasonable assistance for improved access to the domestic as well as
export markets for businesses

2. MSMEs support product development, design innovation, intervention, and packaging elements of a
business

3. MSMEs support the upgrading of technology, infrastructure, and the modernization of this sector as a
whole

4. MSMEs provide employment opportunities and loans

5. MSMEs provide credit limits or funding support to various banks in the country
Old MSME definition based on investment, MSMED
Act, 2006
Manufacturing Sector

Enterprises Investment in plant and machinery

Micro enterprises < or = Rs 25 lakh

Small enterprises > Rs 25 lakh < Rs 5 crore

Medium enterprises > Rs 5 crore < Rs 10 crore

Services Sector

Enterprises Investment in equipment

Micro enterprises < or = Rs 10 lakh

Small enterprises > Rs 10 lakh < Rs 2 crore

Medium enterprises > Rs 2 crore < Rs 5 crore

 New MSME definition based on investment and turnover (2020)
On 1st June, Monday, the Union Cabinet headed by Prime Minister Narendra Modi officially revised the
MSME definition. The recent changes in the definition of micro, small, and medium-sized enterprises
made as a part of the Atmanirbhar Bharat Abhiyaan relief package were approved.

The investment and turnover figures were changed to larger values, thereby resulting in a larger number of
medium-sized enterprises.

Updated MSME Definition

Type of enterprise Investment Turnover

Micro Rs 1 crore Rs 5 crore

Small Rs 10 crore Rs 50 crore

Medium Rs 50 crore Rs 250 crore

The new MSME definition (2020)

Investments will no longer characterize MSMEs.

On 13th May, Wednesday, the center officially revised the MSME definition.

In October 2019, Union Minister Nitin Gadkari had said that the revised definition of micro, small, and
medium enterprises may grant a unified description for all things related to taxation, investment, and
more.
The changed definition was to be implemented via an amendment that would further refine the business
scenario for Indian enterprises. The Union Cabinet had approved the amendment to change the criteria to
classify MSMEs from
“investment in plant and machinery” to “annual turnover.”

On 13th May 2020, Finance Minister Nirmala Sitharaman added the additional principle of turnover along with
the investment.
 Revised MSME Classification

Composite criteria: Investment and annual turnover

Classification Micro Small Medium

Manufacturing Investment < Rs 1 Investment < Rs 10 crore Investment < Rs 20 crore

crore and turnover < Rs and turnover < Rs 50 and turnover < Rs 100
& services
5 crore crore crore
MSME definition – why the change

As Finance Minister Nirmala Sitharaman made the announcement about the change, she also addressed
the reasons behind it. She said the new definition will bring about many benefits that will aid MSMEs to
grow in size.

This was made under Atma-nirbhar Bharat Abhiyaan Economic Package to assuage India’s economic
predicament amidst the pandemic.

Combined with all previous economic stimulus efforts, the total amount of the relief package comes to a
whopping Rs. 20 lakh crore.
 ❖ Key announcements of Atma-nirbhar Bharat Abhiyaan

• Rs 3 lakh crore collateral free automatic loans for MSMEs

• Rs 50,000 crore equity infusion through MSME Fund of Funds

• Rs 20 crore subordinate debt for MSMEs

• Extension of registration and completion date of real estate projects under RERA

• Immediate pending refunds issuance to all non-charitable trusts

• Extension of the due date for ITR for FY’19-20 to November 30, 2020

The Micro, Small and Medium Enterprises Development Act, 2006 is an Act of the Parliament of India.
According to the act, "any buyer who fails to make payment to MSMEs, as per agreed terms or a
maximum of 45 days, would be liable to pay monthly compounded interest at three times the bank rate
notified by RBI". Industries are divided into 2 categories. Manufacturing and services. They are further
divided into micro, small and medium. For both, manufacturing and services sectors, micro industries'
capital requirements are under 1 Crore rupees and an annual turnover of less than 5 Crore rupees. Small
industries shall have cis 50 and 250 Crores respectively.

Headquartered in New Delhi, the Ministry of MSME is a branch of the Indian Government, which is the
apex body for the formulation and administration of rules, and laws, pertaining to micro, small, and
medium-sized enterprises in the country.
Having created 11 crore job opportunities in India while contributing to the GDP by 29%, we can say
that MSMEs are the heart of the Indian economy. And the change in the definition will enable Indian
enterprises to carry out their businesses better.
, visit: www.msme.gov.in

Particulars
Details

Viable MSMEs with a positive growth trajectory

Target Group

Total Corpus Government of India through Mo MSME. Contribution INR

10,000 crore

Tenure of Fund Fund life is 15 years

Scope Disbursement to MSMEs across the country impacting lives

and far and wide.

Fund Type Daughter Funds can be categorized I or II AIFs registered

with SEBI

Exclusions Non-Profit Institutions, NBFCs, financial inclusion sector,

SHGs and other financial intermediaries.
 Growth and Future Prospects of MSME in India

Abstract— In recent years, the significance of MSME has been recognized in the world’s countries for its
major contribution in various socio-economic objectives such as higher economic growth and employment,
output, nurturing entrepreneurship and encouragement and support for exports. MSME play a vital role in
the industrial development of any country. The MSME sector is a backbone of Indian economy for its
contribution to growth of Indian economy. This sector is very much important for moves towards a faster
and inclusive growth of country. The MSME sector can help for achieving the target of Nation
Manufacturing Policy that manufacturing should contribute 25% in India’s GDP by 2022. For that
purpose, the government of India has taken a good initiative of “Make in India”. This paper is to focus on
performance of MSME & growth and opportunities. It is concluded that this sector significantly contributes
in employment, exports and manufacturing output.
Keywords— MSME, Make in India, GDP, growth, employment, opportunities.
 INTRODUCTION
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. (Murthy, 2016). The MSME also play a important role in
the development of the economy with their effective, efficient, flexible and innovative entrepreneurial spirit.
(Dey, 2014). The MSME sector contributes notably to the country’s overall industrial production output,
employment and exports. It is recognized with generating the maximum employment growth as well as
accounting for a major share of industrial production and exports. They have distinctive advantages due to
their size and they required low investment. They have relatively high capital-labor ratio and they require a
minimum gestation period. They try to capture and focus smaller markets; they make sure a more fair
distribution of national income. They make possible an effective utilization of capital and skill resources and
they motivate the growth of industrial entrepreneurship. The MSME sector in India is vast heterogeneous in
terms of the size, variety of product and services and level of technology. This sector is large contributes to
the socioeconomic development of the country. The MSME sector is an important pillar of Indian economy
as it contributes greatly to growth of Indian economy with a vast network of around 30 million units,
creating employment of about 70 million, manufacturing more than 6000 products, contributing about 45%
to manufacturing output and about 40% of exports, directly and indirectly. This sector even assumes greater
importance now as the country moves towards a faster and inclusive growth agenda. Moreover, it is the
MSME sector which can help realize the target of proposed National Manufacturing Policy of raising the
share of manufacturing sector in GDP from 16% at present to 25% by the end of 2022.
(PlanningCommission)1. The objective of paper is to find current status of performance of MSMEs in India
also to examine the major challenges faced by MSMEs for inclusive growth and to find the opportunities
available for development of this sector.
 LITERATURE REVIEW

Venkatesh and Muthiah (2012) found that the role of small and medium enterprises (SMEs) in the
industrisal sector is growing rapidly and they have become a thrust area for future growth. This research
emphasized that development of SME sector is necessary for the economic well-being of the nation. Also
they focus on it is essential that the entrepreneurs along with government support take necessary steps for
future development. The above literature highlights at the various aspects viz. performance, growth and
challenges of MSMEs in Indian economy. Dr. Meeravali S., K.Ramesh et al. (March 2017) found that
though MSME total working enterprises, employment and market value of fixed assets grown at CAGR of
4.39%, 4.75% and 6.64% respectively, the contribution from manufacturing and service sector MSME
contribution to GDP is -1.53% and 1.82% respectively. Researchers also suggest that government has to
adopt integrated policy, promote skill development to increase productivity and also providing accessible
credit through government sponsored agency exclusively to MSME is essential to increase productivity and
contribution to economic growth. Singh et al. (2012) analyzed the performance of SSI in India and focued
on policy changes which have opened new opportunities for this sector. This study concluded that SSI
sector has made good progress in terms of number of SSI units, production and employment levels. The
study recommended the emergence of technology development and strengthening of financial infrastructure
to boost SSI and to achieve growth target.

OBJECTIVES:

The main objective of the paper is to evaluate the overall growth and developments in the MSMEs sectors in
India. The second objective is to find key challenges faced by the MSMEs sector as well as also to study
future prospects of MSMEs and Third objective is to examine government initiative to regenerate the MSMEs
sector.
 RESEARCH METHODOLOGY

The current research study is based on “Exploratory” in nature. The major emphasis in such study is on the
discovery of ideas and insight (Kothari, 1996). The study is based in secondary data covering 18 years i.e.
2001 to 2018. All financial data are compiled from MSMEs Annual report, Government of India. Different
articles and information available in different journals and magazines are also referred for compilation of
this paper.

CONCEPTS
Small Scale Industrial Unit (SSIs): As per the Government of India (2000), the small scale undertakings are
those which are engaged in manufacturing, processing or preservation of goods and in which the investment
in fixed assets, whether held on ownership terms, or on lease or by hire purchase, does not exceeds Rs. 1
crore.

Classification Manufacturing Enterprises Service Enterprises

Micro Rs. 2.5 million/ Rs. 25 lakh Rs. 1 million/ Rs. 10 lakh

Small Rs. 50 million/ Rs. 5 crore Rs. 20 million / Rs. 2 crore

Medium Rs. 100 million / Rs. 10 crore Rs. 50 million / Rs. 5 crore

2006-07 2017-18*

No.
Economic Parameter Registered Unregistered Total
1. No. of Enterprises (lakh) 15.53 245.48 261.01 633.88

(5.94%) (94.06%) (100.00%)

i) Manufacturing 10.35 64.18 74.53 ----------

Enterprises

ii) Service Enterprises 5.18 181.30 186.48 -------------

2. Employment(lakh) 92.04 502.57 594.61 1109.89

i) Manufacturing 79.85 224.22 304.07 -----------

Enterprises

ii) Service Enterprises 12.19 278.35 290.54 -----------

iii) Male 73.40 412.75 486.15 844.68

iv) Female 18.64 89.82 108.46 264.92

3. Average Employment per 5.93 2.05 2.28 1.75

Unit (number)

i) Manufacturing 7.71 3.49 4.08 ------

ii) Service 2.35 1.54 1.56 --------

4. Share in GDP (%) 35.13% 37.54

(2012-13)

5. Fixed Investment (Rs. 5,00,758

Crore)
 6. 0.19
Employment per Rs. 1

lakh investment in Fixed

Investment

7. Source of Finance (No. 15.5 (6%) 245.5 (94%) 261 (100%)

in Lakh)

No Finance/Self Finance 13.6 228.5 242.1

(88%)
(93%) (93%)

Institutional Sources 1.7 (11%) 11.8 13.5

(5%) (5%)

Non-Institutional 0.2 5.2 5.4 (2%)

Sources (1%) (2%)

*Annual Report of Ministry of MSME 2017-18

INTRODUCTION TO ENTREPRENEURS MEMORANDUM
As per the provision of the Micro, Small and Medium Development Act (2006), MSMEs file
Entrepreneurs Memorandum (Part I) at DICs. After commencement of the project, the entrepreneur
concerned files Entrepreneurs Memorandum (Part-II) / [EM-II]. Prior to enactment of the Micro, Small
& Medium Enterprises Development Act, 2006 (MSMED Act, 2006) there was a system of registration
by small scale industrial units to the DICs.
Now, filing of EM-II is discretionary for micro, small and medium enterprise engaged in both
manufacturing and services. However, it is mandatory for medium scale enterprise engaged in manufacture
or production of goods pertaining to any industry specified in the First Schedule of the ID&R Act, 1951.

Distribution of EM-II by Type of Enterprise Out of the total EM-II filed, distribution among micro, small
and medium segments are as mentioned in the following table
Table.1: Distribution of EM-II filed MSMEs by type of Enterprise

Year Micro Small Medium Total

2007- 153110 16730 467 172703.00

08

2008- 170262 18792 702 193026.00

09

2009- 185180 23870 1409 213206.00

10

2010- 205112 29125 1263 238429.00

11

2011- 242539 34225 2949 282428.00

12

2012- 275867 41502 5449 322818.00

13
 2013- 296526 59127 7338 362991.00

14

2014- 346206 70933 8219 425358.00

15

Average234350 36788 3475 276370

CAGR2 10.74% 19.79% 43.12% 11.93%

Source: Annual Report, 2016-17(Ministry of MSME, GoI)

The average growths of Micro, Small and Medium enterprises are 234350, 36788 and 3475 respectively
with overall average growth rate of 11.93%. The maximum growth was witnessed by medium scale
enterprises is 43.12%. At the year ending 201415, there were 234350 micro enterprises with annual growth
rate is 10.74%.

Fig.1: Total Number of EM-II filed

When the Micro, Small and Medium Enterprise Act were introduced in 2006, MSME in India always has
shown a progressive and positive growth. If we look in the above graph the total number of Entrepreneur
Memorandum – II filed from 2007 to 2015

(Fig 1), it’s very clear that it is an upward moving trend.

Table.2: Status of working MSMEs, Employment, Investments and Gross Output in India

Year No. of employment market value Gross

working of FAs (in output (in
(in Lakh)
enterprise crore) crore)

2001-02 105.21 249.33 154349 282270

2002-03 109.49 260.21 162317 314850

2003-04 113.95 271.42 170219 364547

2004-05 118.59 282.57 178699 429796

2005-06 123.42 294.91 188113 497842

2006-07 361.76 805.23 868543.79 1351383.45

2007-08 377.37 842.23 917437.46 1435179.26

2008-09 393.7 881.14 971407.49 1524234.83

 2009-10 410.82 922.19 1029331.46 1619355.53

2010-11 428.77 965.69 1094893.42 1721553.42

2011-12 447.73 1012.59 1176939.36 1834332.05

2012-13 467.54 1,061.40 1,268,763.67 **

2013-14 488.46 1,114.29 1,363,700.54 **

2014-15 510.57 1,171.32 1,471,912.94 **

Average 318.3842857 723.8942857 786901.9379 1034122.14

CAGR 11.94% 11.68% 17.48% 14.30%

Source: MSME Annual Report 2014-15, GoI

Census, the performance of MSME Sector is 2007- 8.50 13.00

summarized as below. It may be noted that the 08
Fourth All India Census of MSME, unregistered
sector was assessed by conduct of sample survey 2008- 12.80 10.30

of the sector. 09

2009- 10.40 6.70

10
It is clear from the table No. 2 that number of 2010- 7.40 4.40
enterprises, employment, investment in fixed
11
assets and gross out of MSME units in India
show an increasing trend over the fourteen years. 2011- 7.80 4.40

From FY 2006-07, figures includes activities of 12

wholesale/retail trade, legal, education & social
2012- 6.85 5.60
services, hotel & restaurants,
transports and storage & warehousing 13

2013- 6.76 9.10

14

2014- 6.54 8.56

15

2015- 6.60 7.62

16

CAGR 1.81% 0.45%

Performance of Micro, Small and Medium (MSME) sector is assessed by conduct of periodic All India
Census of the sector. As per the results of Fourth All India Census of MSME, the sector contributes
significantly to the number of enterprises, employment and output of the country. Based on the data sets of
Fourth All India Census of MSME, augmented with data sets of EC, 2005 and growth rate observed during
Fourth (1998) and Fifth (2005) Economic (except cold storage) for which data were extracted
Economic Census 2005, Central Statistics Office, MOSPI. - Estimated on the basis of per enterprises value
obtained from sample survey of unregistered sector for activities wholesale/retail trade, legal, education &
social services, hotel & restaurants, transports and storage & warehousing(except cold storage) which were
excluded from Fourth All India Census of MSME, unregistered sector. Number of enterprises and
employment registered an annual growth rate of 12% approximately
Where as the value of fixed assets growth rate of 17% approximately. The last 3 years gross output data is
not available so growth rate from 2001 to 2012 is 14% approximately.
Table.3: Comparative growth rate of MSME sector and
Industrial Sector

Year Growth Rate of overall Industry Growth rate of

Sector
MSME Sector
(%)
(%)

2000-01 5.00 8.00

2001-02 2.70 6.10

2002-03 5.70 8.68

2003-04 7.00 9.64

2004-05 8.40 10.80

2005-06 8.20 12.32

2006-07 11.60 12.60

Source: Annual Report of Ministry of MSME

In Table 3 shows that the overall growth of industrial sector and the growth of MSMEs sector during sixteen
years. This two sectors shoes moderate to high growth rate during early phase of this period. But early
period of last six years growth rate of MSMEs was greater than that of the overall industry growth rate. And
later on it is decreasing. In 2000-01, the growth rate of MSMEs was 8.00 and it declined to 6.10 next year,
then it increasing to reach up to 13.00 of period 200708.
Later, it decreased and fell to a down of 4.4% in 2010-11 then increased up to 9.10.
 MSME Growth rate of employment and enterprise by sector

Comparison between SMEs contribution to GDP of India and some developed global economies:

India needs to create 10 to 15 million job opportunities per annum till 2030 to provide useful employment to
its population3. In budget 2018-19, the government largely focused on MSMEs as the preferred route for
rapid job creation and selfemployment. The MSME sector employs over 111 million people and contributes
nearly 31% of
India’s GDP4. The total number of enterprises in MSME sector was 46 million with total employment of
106 million. Current MSME employment rate is at 28% of the overall employment. The current growth of
MSME is non-uniform and there exists a significant gap in growth of enterprises across services and
manufacturing sectors.
Steps to lower this gap must be taken for a balanced growth outlook.
 PROBLEMS FACED BY MSMES

1. Absence of adequate credit from banks- The MSMEs are faced more problem of credit from the banks.
The loan process of the banks is very lengthy, so much documentation required with high cost
processing fee. The banks are not providing adequate amount of loan to the MSME’s.

2. Competition from MNC’s- The MSME’s is facing the huge competition from the multinational
companies. Because of multinational companies are providing quality goods at low price.

3. Poor infrastructure- MSME’s are developing so rapidly but there is lack of infrastructure facilities.
Because of poor infrastructure, their production capacity is very low with production cost is very high.
4. Unavailability Resources- Due to non availability of raw materials, work force and other inputs in the
market. Therefore it is very difficult to produce the products at affordable prices.

5. Lack of advanced technology- In the MSME’s sector, there is a lack of awareness of advanced
technologies of production. They are using traditional methods for producing goods.
6. Lack of distribution of marketing channels- MSME’s not adopting innovative ideas for promotion of the
products distribution and advertisements. Because of ineffective advertisement and poor marketing
channels leads to a very poor
 FUTURE PROSPECTS OF MSMES

1. Employment generation: There are large opportunities in the field of manufacturing and service
rendering of MSME’s. In the field of retail and manufacturing sector, MSMEs are generating different
and ample amount of employment.
2. Focus on customer satisfaction: Primarily, MSMEs manufacturing goods focus on test and preferences,
liking and disliking of the consumer. But now a day they produce goods according to the needs or
expectations of the customers. So the MSMEs can be more customer satisfaction oriented.
3. Minimization of regional imbalance: The MSMEs will utilize the manpower of rural areas so such areas
of the nation can equally developed through the running of MSME units in rural areas. So this is helpful
to minimize or remove the regional imbalance.
4. Development of Export: In the international market, there will be a large demand of Indian product like
wooden items, other handmade articles etc. So MSMEs have the potential to improve the export of
India.
5. Attraction of Foreign Investment: The Indian MSMEs are the growing sectors and their growth rate and
return on investment is satisfactory. This sector can attract
64 foreign investment in India
, so their growth rate increasing drastically.
Fresh Proposal for Pradhan Mantri Mudra Yojana
(For proposals for advances up to Rs.10,00,000/-)
Branch - Srikrishnapuri Region -Patna (Rs in Lacs)

Name of the Account M/S Mast Magan

Name of Proprietor Mr. Rohit Kumar Pandey

Asset Classification as at ---- New Account

Bank’s Credit Rating as per ABS as at NA

…………………..

Constitution Proprietorship

Date of Establishment 28.04.2022

Dealing with the Bank since Maintain saving account no.18630100018988

since 15.09.2017

Home Address Permanent Address:

Rohit Kumar Pandey, s/o Amrendra Pandey,
Gordhia Sansa, Daudnagar, Dist.
Aurangabad-
824143, Bihar
Communication Address:
Rohit Kumar Pandey
H/o Madhuri Sinha, W/o Rajesh kumar,
Flat no.104, 1st floor, Anand Sri Complex,
Ramkrishna path, North Srikrishnapuri,
Patliputra colony, Patna-800013

Shop Address MAST MAGAN,

Khata no.457, Plot no.1730, Gorhna, Neura,
Shivala, Patna sadar, Patna-801113, Bihar
Nature of Activity Resturant

Whether names of promoters, directors, RBI defaulters’ list dated- No

Company, group concerns figure in Willful defaulters’ list dated- No

ECGC caution list dated- No

Cibil score- 762 No

Date of last sanction / review Fresh Account

Date of Document/LAD NA

Existing Limit Facility : Rs. NIL

Proposed Limit Facility: Term Loan for Rs.9.00 Lacs

Whether it is under Government Sponsored Yes/No Scheme-PMMY

Scheme (Tarun)

Whether eligible to be covered under CGTMSE, Yes

if yes then Date of Coverage

Whether Take over norms complied NA

 Whether directors of the borrower Company are No
relatives of any member of the Bank’s
Board/Senior Officer of the Bank/ Member of
any other Bank’s Board

Name of Partners/Proprietor:

Name Net Worth

Mr. Rohit Kumar Pandey 215.00 lacs

Background of the firm (In brief): M/S Mast Magan is a new established & being
registered on 28.04.2022 by Mr. Rohit Kumar Pandey as a proprietary firm located at
Khata no.457, Plot no.1730, Gorhna, Neura, Shivala, Patna sadar, Patna-801113, Bihar.
Mr. Rohit Kumar Pandey is maintain a saving account no.18630100018988 with us since
15.09.2017. Mr. Rohit kumar Pandey was earlier working in Ashiana Creator pvt ltd., &
he is very well know to
Mr. Ravi, who is the director of the company. Mr. Rohit wants to establish a new
restaurant & he has taken food safety license no.10422000000731 under FSS Act, 2006.
The proposed restaurant is located at Danapur Bihta highway road & the total area of
restaurant is approx. 7000 sq ft. The firm has taken lease rental agreement for 84 month &
requested to sanction term loan to repay in 84 EMI. The restaurant accessibility is very
good & parking space is sufficient for the customer. Area of the restaurant is sufficient &
construction of the restaurant is in good stage & want to establish in a new look restaurant.
Due to lack of fund he need financial support from banks & in this connection he want to
purchased furniture, kitchen and other related product(fixed assets). It is a new
establishment shop and firm fulfill his gap of fund to purchase of stock as per projected
sales & quotation submitted by him, we can consider his application for granting term loan
facility of Rs.9.00 lakhs in PMMY (Tarun) Scheme.
.
Loans from other Banks/ Financial Institutions:
 Name of the Institution Limit Outstanding Excess / Remark
As on Overdue

Data not available NA NA NA NA

Any reschedulement agreed by our bank/ other financial Institution/ Bank (in last –3- years):
No,(If yes give details)

Conduct of account/other information (in case of existing accounts):

1 Dealing and conduct of the account NA

2 Date of last inspection, adverse comment; if any

3 Whether Insurance coverage is adequate and valid Yes/No

up to Valid Up to- Under Process

ZIAD Inspection irregularities:-

Comment of Auditor/ZIC Inspecting Officer Comment of the Branch

Na

Facilities enjoyed by Associate/ Sister Concerns: No

Name of company/firm And its Business/ Date of last Commitments with us/other bank
Prop./partners Activity review Branch, conduct of account

Operational Details of existing credit facilities (for Period ---NA---)

(A) Demand Loan/Term Loan (Rs in lacs)

Loan Limit

Present O/S

Overdue Installments/Interest No
 (B) Cash credit/overdraft Facilities

(a) Maximum balance (Dr)

(b) Turnover in the account in last 12 month

(Cr)

Average balance (Dr)

Interest Earned

(c) Whether cheques drawn in accounts are

returned unpaid for financial reasons, If
yes no. and amount.

[C] Bills Purchased/Discounted Limit

(a) No and amount of bills purchased

(b) No and amount of bills returned unpaid

Contingent Facilities Letter of Bank Guarantee

(D) Credit

Limit

(a) No. of L/C opened / Guarantee issued

(b) Present outstanding

O/s In AB/Bill past Due if any

Financial Performance/ Ratios of the Firm/Company
Particulars Estimated Projected Projected Projected Projected
Year Ending 31st March 20 2022-23 2023-24 2024-25 2025-26 2027-28
Sales 49.50 66.15 75.60 85.05 94.50
Net Profit After Tax 3.28 7.49 9.82 12.39 14.99
 Depreciation 1.73 1.55 1.40 1.26 1.13
Net worth 12.15 14.64 16.46 18.85 18.85
Unsecured Loan
Term Loan 8.82 7.14 5.78 3.81 1.46
Current Assets 3.42 5.79 7.65 9.33 8.11
Current Liabilities 2.08 2.36 3.17 3.60 1.46
Net Current Assets
Fixed Asset 15.54 13.99 12.59 11.33 10.20
Current Ratio 1.65 2.45 2.41 2.59 5.55
DE Ratio (TTL/ TNW)
DE Ratio (TOL/TNW) 0.73 0.49 0.35 0.20 0.08
Profitability Ratio
(NP/Sales) %
DSCR 2.14 3.55 4.40 5.35 6.33

Pre sanction inspection comments:

Pre sanction inspection of the unit has been carried out by Mr. Vikash Kumar Roy,
Manager on 10.05.2022.He has given his observations as under:.
 M/S Mast Magan is a new established & being registered on 28.04.2022 by Mr. Rohit
Kumar Pandey as a proprietary firm located at Khata no.457, Plot no.1730, Gorhna,
Neura, Shivala, Patna sadar, Patna-801113, Bihar.
 The firm has taken lease agreement for 7 years starting from 01.04.2022
 Mr. Rohit Kumar Pandey is a young energetic person & engaged from last 2 months
to establish in a stylish look.

Confirmation : We have carried the CDV for his permanent address of Mr. Rohit Kumar
Pandey. The report has submitted by Omega credit information india Pvt Ltd & he
confirmed the permanent house is own and staying with his family since 2003.

Recommendations:
 In view of the facts and figures stated above and taking into consideration banking
relationship of the Promoter & back support from a big entrepreneur Mr. Ravi Kumar, who
is the director of Ashiana Creator pvt ltd. We recommend for sanctioning term Loan of
Rs.9.00 lacs (Rupees Nine lacs only) to M/s. MAST MAGAN & its proprietor Mr.
Rohit Kuma Pandey in PMMY Scheme as per existing the terms and conditions
mentioned in
Annexure D and elsewhere in the proposal for a period of 60 months subject to annual
review.

(Sr. Manager)
Comments of Sanctioning Authority :

SANCTIONED
(Branch Head )
Date: 16.05.2022

Annexure –D
Nature of Facility Term loan under PMMY scheme
Limit 9.00 LACS (Rupees Nine Lacs Only)
Purpose BUSINESS
Margin: 25 %
Rate Of Interest: Under Floating option, BRLLR+0.25+2.20 = 9.35%, being ONE
 YEAR BRLLR is 6.90 % and Strategic Premium is 0.25 %

Repayment Period: 84 months Subject to Annual Review

Repayment Schedule: 84 month including moratorium period of 03 month, The installments of
Rs.11,111/- each & plus interest as and when debited.
Moratorium Period: 3 Month
Processing charges Nil as per circular no. BCC: BR: 107/338 dated 14.07.2015.

Security Facility to be covered under CGTMSE Scheme of PMMY Scheme and

further secured by Hypothecation of Furniture & Fixture.
Security 1) D.P. Note (LDOC-3 B)
Documents 2) Exclusive 1st charge by way of Hypothecation of entire raw materials,
stock-in-process, stores & spares, packing materials, finished goods and
Book-debts of the Firm, both present & future (LDOC-17B).
3) CIBIL undertaking & PDR
4) Letter of Continuing Security (LDOC -7)
5) Undertaking not to withdraw deposit (LDOC 64)
6) Letter of undertaking in respect of book debt(ldoc 51)
7) CGTMSE Undertaking
8) Power of Attorney in respect of Book Debt facility (LDOC 86)
9) Usual Undertaking and other documents

Insurance Insurance of Stock & Book debt with our banks clause to be obtained.
Other Conditions • Bank’s nameplate to be prominently displayed at the place of
Indicative terms are storage of the goods charged to the bank and other business
furnished • places of the concern.
(As per Scheme Prescribed undertaking in respect of details of legal heirs,
/Sector of Advances, immovable properties and other matters are to be obtained from
• •
relevan the directors & guarantors.
•
t to concerned Undertaking for CIBIL purpose be obtained.
borrower accounts Other Usual undertakings are to be obtained.

will be stipulated.) The ROI & other Charges are subject to change from time to time
based on changes in Base Rate or Bank guidelines or RBI /GOI
guidelines
PRE CONSTRUCTION IMAGE
POST CONSTRUCTION IMAGE
 SWOT Analysis of MSME:

In order to operate successfully any units need proper infrastructure facilities. However, most MSMEs
operate with very little infrastructure. The purpose of the government's cluster development program is to
set up Common Facility Centers to get sophisticated tools, technology, design etc. Overall skilled human
resources to be an extremely important component for success in the MSME sector. also very important to
attract and retain the available human force as well as develop new talentsThe government has undertaken
many capacity building programs to address this issue. Such as Entrepreneurship development programs
and vocational training programs. We discuss SWOT analysis on overall aspect of MSME]

Strenght :

i. Adapting to change: The small business are not much involved in administrative process so it is
easy to adopt change.
ii. Good customer relation Small business proprietors tend to be intimate with their customers and
clients which results in greater accountability and maturity. They usually offer a more
personalized approach to interacting with clients. Customers who are treated like family are more
likely to return to that business in the future.
iii. Independence: Independence is another Strength of owning a small business. One survey of small
business owners showed that 38% of those who left their jobs at other companies because they
wanted to be their own boss and to take their own decision. In addition, many people desire to
make their own decisions, take their own risks, and enjoy the rewards of their efforts.
Weakneses :

i. Difficult to reach the potential customer: it is difficut to reach to potential customers in the
market by this MSME because it required publicity and lot‘s of financial burdan.
ii. Difficult to get financial Aid: this is the major weakness of the MSME as the bank, Govt.
corporation and other financial agencies are not easily provide the financial help to this sector.
iii. High production cost: In the MSME the production cost are coming very high so it is the
hinderans for the MSME sector development

Opportunities:

i. Government is providing many opportunities for MSMEs. Government has formed many policies
and financial institutions for helping small units like
ii. Policy for Development of handloom Industry
iii. Policy for Khadi and Village Industries
iv. Industrial Estates Programme

There are many Government and Non-Government Financial Institutions who provide financial assistance
to MSME‘s like

a) SIDBI – Small Industries Development Bank of India

b) SIDO – Small Industries Development Organisation

c) SISI‘s – Small Industries Service Institutes

d) NSIC – National Small Industries Corporation

e) NIESBUD – The National Institute For Entrepreneurship and Small Business Development

f) NABARD – National Bank for Agriculture and Rural Development

THREATS:

i. Timely Payment – While large corporations and banks have been fortified with ample low-cost
cash to buy small businesses‘ products and services, they continue to pay slowly, bargain harder
and demand more concessions from powerless small businesses who are selling their souls
―where the money is
ii. New costs, taxes and compliance — As social causes like sustainability, diversity, healthcare and
fair taxation are being legislated by governments and lobbied into favourable terms for
corporations, small business is getting choked. Small business used to lament about paperwork.
Conclusion

Micro, Small and Medium Enterprises contributes to economic development of India in various ways
such as employment generation in rural and urban areas, providing goods and services at affordable costs.
The current Market value of Indian MSMEs is $5 billion. It is estimated that in terms of Market value, the
sector accounts for about 45% of the industrial output, 40% of total exports of the country, 45% industrial
units, 42 million employment and more than 8000 products in Indian economy. Government of India has
taken various initiatives to make this sector more vibrant and significant player in development of the
Indian economy. The definition and coverage of the MSME sector was broadened MSME Development
Act 2006 which recognized concept of 'enterprise' to include both manufacturing and service sector
besides defining medium enterprises setting up a Board for developing policy frameworks and indicating
procurement policy.

In a India More than 40 laws apply to MSME and more than 50 inspectors can visit their factories they
also has powers to penalize small businesses. It is difficult to focus on important areas such as production,
marketing and technology upgrades in this environment. There are a number of laws applicable to MSME
that have lost their usefulness at that times and there are a number of laws that hinder the healthy operation
of Enterprizes. So Such meaningless laws need to be abolished. In this condition government is abolish
some unusable rules and regulation. The current government has repealed 1,200 laws under this process
and identified more than 1824 such laws, Which can be abolish. New entrepreneurs need to provide single
window operating system, some states has already intiative it. SWOT analysis helps to understand the
internal and external factors that are useful not only for MSMEs but also for large businesses and other
organizations As a result of globalization, MSMEs are facing many problems. It is therefore important to
understand the weaknesses and strengths that can be better Page 13 of 13 understood by SWOT analysis,
In This research Article researcher attempts to explain the strengths, weaknesses, opportunities and
challenges associated with all aspects related to MSME. so we can understood the current business
environment.
References

URL.

https://msme.gov.in/

https://www.globaljurix.com/blog/growth-and-future-prospects-of-msmes-industries-in-
india.php#:~:text=According%20to%20the%20Indian%20Economy,in%20India's%20GDP%20by%2020
22.

https://corpbiz.io/learning/msme-sector-in-india-potential-and-future-prospects/

https://indiafoundation.in/articles-and-commentaries/the-future-of-the-indian-msme-and-the-
manufacturing-sector/

https://www.researchgate.net/publication/339352056_Micro_Small_and_Medium_MSME_in_indian_pers
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