Micro, small and medium enterprises (MSMEs)
The SDGs have encouraged the growth of MSMEs to support entrepreneurship and the creation of decent jobs in the non-agriculture sector. In India, the development of MSMEs has always been considered important in all the industrial policies, be it pre or post-liberalisation policies, whether at the national level or the state level. MSMEs are important due to their capacity to generate employment, need for low capital investment, use of local resources and traditional skills, and achievement of a higher level of economic development (Lahiri, 2012). The MSMEs tend to eliminate regional imbalance and concentration of economic power. As ancillary units, they are considered complementary to large industries.
Before liberalisation, successive industrial policies of the government had protected small-scale industries (SSIs), by reserving a number of items for them. The government followed procurement preference policies wherein certain purchases by the government were to be made only from the SSIs. But the liberalisation policy in 1991 changed this scenario and the sector has seen the introduction of promotional policies instead of the erstwhile protective policies. The list of items reserved for this sector were reduced from 807 in 1977 to only 20 in 2011—12 and finally the list was abolished altogether in 2015.
The MSMEs used to file an Entrepreneurship Memorandum (EM) and get registered in the state under the Micro, Small and Medium Enterprises Development Act (MSMEDA), 2006 from September 2006 till 18 September 2015. Prior to this, the category was known as SSI and the units were registered under the provisions of the Industries (Development and Regulation) Act, 1951. The number of registered SSIs in Gujarat were 312782 till September 2006. Since September 2015, the MSMEs no longer need to be registered at the state level. They are now required to file the online Udyog Aadhar Memorandum (UAM) with the Development Commissioner MSMEs, New Delhi. The UAM registration has replaced EM and SSI registration for all purposes. Since the data post-2015 is not available at the disaggregated level for the state of Gujarat, the analysis has been limited to the period 2006—15 for the manufacturing units registered under the MSME category in the state.
The unpublished data for MSMEs in Gujarat has been collected from IC, Gandhinagar for the period October 2006 (the date of implementation) to December 2015 (the time till which they continued to be registered at the state level). Each manufacturing unit has been assigned to a single product group as per NIC 2008 by the IC. The investment figures are in current values, taken at the time of registration of the unit (based on Part II submitted to the DIG4). The data analysed is only for registered’ manufacturing units under the MSME category. In all, a total of 235554 manufacturing units under the MSME category had been registered in Gujarat till December 2015. The distribution of these in terms of MSMEs is shown in Figure 4.1. Even within the MSME category, the micro-scale (investments less than Rs. 25 lakhs per unit) units dominate, with a share of 86 per cent. The medium scale has a share of just 1 per cent.
FIGURE 4.1 Distribution of manufacturing sector MSMEs. Source: Unpublished data from Industries Commissionerate.
