MSMEs in India account for around 8 percent of the country’s GDP, 45 percent of manufacturing production, and over 40% of exports.
In accordance with the Micro, Small, and Medium Enterprises Development (MSMED) Act of 2006, the Indian government has launched MSME (Micro, Small, and Medium Enterprises). These businesses specialize in the creation, manufacturing, processing, or conservation of goods and commodities.
MSMEs are a vital part of the Indian economy, and several states have made significant contributions to the country’s socio-economic growth. It not only creates job possibilities but it also partakes in the development of the country’s backward and rural areas.
As per the information from the 2018-19 annual report by the government, India is home to about 6,08,41,245 MSMEs. However, the total number of MSME industries has also risen in the last four years.
Prior to 2018, MSMEs used to be classified depending on the initial investment. However, after the modification in the ordinances, they are categorized depending on the annual turnover of the firm.
Micro enterprises are those with an annual turnover of up to 5 crores. Firms with annual turnover above 5 crores and below 75 crores are small enterprises. Meanwhile, the medium enterprises have a yearly turnover of more than 75 crores and below 250 crores.
Himachal Pradesh As A Land Of Opportunities
India is a rapidly developing country, and there are many states and union territories that offer plenty of chances for growth. One such state is Himachal Pradesh which is a land of opportunities, considering every sector.
Himachal Pradesh is one of India’s most well-known and accessible hill states. People visit this state from across the country and other countries to appreciate the natural splendor of this incredible state.
Himachal Pradesh has long been one of the most significant benefactors to the growth of tourism. As a result, it has contributed to the nation’s economic development and success.
When it comes to investment chances in Himachal Pradesh, the available opportunities are vast. It is because there are about 338 projects with $17.03 bn investment opportunities spread across 12 different districts.
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There are many growth opportunities and advantages for the MSME sector in Himachal Pradesh:
- Foresighted and active facilitation and impressive policies for MSME sectors
- Streamlined procedure and quick permissions related to MSME clearances
- Powerful industrial – zero-tolerance strategy
- The state literacy rate is 82.80% which is higher than the national average literacy rate, which stands at 74%
- It recorded a massive boost in Technical institutions in the recent 6 years
- It is home to 3532 private educational organizations
Business Encouraging Aspects
- Available land property for setting up MSMEs
- 24 × 7 electricity at reasonable prices
- Availability of water resources for residential and commercial purposes
- It promotes tourism and is a one-stop state for the best tourist spots
- Loaded with incredible places to explore the clean and natural territory
- Facilities traveler wellness all over the world
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In Himachal Pradesh, there are many growing sectors that can help in the growth and development of the MSME sectors. Here are the primary focus sectors:
Agriculture and Food Processing Industry
- Known as the fruit bowl of India
- Himachal Pradesh is ranked 2nd In the production of Apple And Almond
- Home to 60 developed industrial estates
- Himachal Pradesh is considered as the pharmaceutical hub of Asia
Hydro and Renewable Energy
- This state is a net exporter of power at affordable rates
- Himachal Pradesh gives the ready power supply
Housing and Urban Development Industry
- Himachal Pradesh has the highest household disposable income average compared to other states in the country
Information Technology (IT) Industry
- Himachal Pradesh has the highest teledensity of 141% in India among the service regions
Education and Skill Development
- This state is given 1st position for its initiatives and schemes in education compared to other states
Wellness, Healthcare, and Ayush
- This state is home to a diverse range of medical and aromatic plants
- Production of modern and traditional medicines
- Himachal Pradesh is among the popular states with lots of local and international tourist
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Overview Of MSME Sector In Himachal Pradesh
The number of small-scale industries in Himachal Pradesh is steadily expanding. Industrialization in the state has accelerated in the recent two decades due to infrastructure development and ongoing efforts from the state and the national governments.
The national government’s industrial package for Himachal Pradesh, which was implemented in January 2003, has provided the state’s industrialization a rapid boost. Several MSMEs have emerged in Himachal Pradesh, especially in the districts of Solan, Sirmour, and Una. As a result, they significantly alter the state’s industrial scope.
Himachal Pradesh’s economy was mainly agrarian during the independence period. In addition, nearly all other basic household products were imported. During the 1990s, the growth rate stayed relatively constant. The average annual growth rate during the decade was 5.7 percent, which is comparable to the national average.
The speed of industrial development has accelerated following the national government’s grant of a special package of incentives for the establishment of industries in Himachal Pradesh, which was announced in 2003, and the state government’s package of incentives in the industrial policy. As a result, the state has seen significant investment in MSEs and the medium and large-scale industry.
Until 1991, Himachal Pradesh had only 20,545 micro and small units registered with a total investment of 15054 lakhs and 86,227 people employed. After that, unit registrations have been on a downward trend until 2003 to 2004, when the central government provided a special package of incentives to the state.
Following the execution of the package, improvements in the registration of small-scale units began. In addition, many leading entrepreneurs proceeded to invest in the state. Because of that, the units surged from 3708 lakhs in 2003 to 2004 to 37419 lakhs from 2014 to 2015.
After the special package of incentives, the majority of the units registered with the state industries section were in the unclassified product group. Other firms come under food processing enterprises, mechanical engineering, packaging, electrical, electronics, pharmaceuticals, plastics, chemicals, automobiles, footwear, and so on. However, this trend has changed since the MSMED Act changed the description of industries.
When it comes to investments (as of 2006), the highest amount was invested in the chemical and associated products, mechanical, electrical, and electronic commodities. However, this trend has shifted since the MSMED Act increased the investment limit for micro, small, and medium enterprises.
As a result, chemical and mechanical products, which were previously classified as medium-sized businesses due to the high investment need have now shifted to the small-scale area. With that, they invade the first, second, and third positions respectively. Following the execution of the central government’s industrial package, Himachal Pradesh has seen a significant increase in the chemical, mechanical, electrical, and electronics sectors.
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Vision Of State Government Towards The Growth Of MSME
In the last few years, Himachal Pradesh has made incredible progress in the sector of industrialization. The introduction of the liberalized economy, and the announcement of a specific package of incentives for the state, have resulted in a powerful response to new industrial initiatives in Himachal Pradesh.
There are currently several initiatives in place to facilitate and develop the Micro, Small, and Medium Enterprise sectors in all 12 districts of Himachal Pradesh by offering techno-managerial advice or consulting to existing and forthcoming entrepreneurs.
In order to turn its goal into clinical success related to the MSME sector, the state government has established a number of policies and initiatives. The following are the primary components of its vision.
- The MSME Development Institute of Himachal Pradesh conducts several training programs to improve entrepreneurial skills among the state’s educated youth.
- The Himachal Pradesh MSME Development Institute also helps the MSME units through different support schemes.
- There are programs that benefit the MSME unit sensitization to the newest technical advancements and improvements.
- The Himachal Pradesh government’s objective is to create a universal space or network of MSMEs in the state with a primary focus on locally relevant businesses.
- Their main goal is to encourage regional growth across the state by bringing together various MSMEs.
- Another objective is to increase the level of competitiveness for these businesses by employing a variety of quality improvement approaches and technologies.
- They also aim to drive MSMEs forward by providing them with a suitable working environment.
- The financial benefit is the most significant feature of MSMEs in Himachal Pradesh. Through various initiatives, the government has made it possible for workers to obtain financial assistance.
State Government Initiative And Schemes
Technical Consultancy Services, techno-managerial help, training, and other services are provided by the MSME Development Institute in Himachal Pradesh for the development of current and new micro, small, and medium companies in all 12 districts. It is executing numerous central government programs and plans aimed at making the state’s MSMEs globally competitive.
Here are some schemes and initiatives passed by the Himachal Pradesh state government to promote the MSME sector.
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Micro & Small Enterprises Cluster Development Programme (MSE-CDP)
The Ministry of Micro, Small, and Medium Enterprises (MSME) has selected the cluster development method as a fundamental strategy for improving the productivity and competitiveness of Micro and Small Enterprises (MSEs) and their collectives. The clustering of units also allows providers of several services to perform their assistance more cost-effectively, lowering prices and increasing service availability for these businesses.
Credit Linked Capital Subsidy Scheme (CLCSS)
This scheme intends to help Micro and Small Enterprises upgrade their technology by giving a 15% capital subsidy on institutional funding used to introduce well-established and enhanced technology in authorized sub-sectors. The revised scheme calculates the admissible capital subsidy based on the purchase price of the plant and machinery. The maximum loan amount that can be used to calculate the grant under the scheme is Rs. 1 crore.
Reimbursement scheme for ISO-9000 / 14001 / HACCP Certification
This scheme provides for reimbursement of up to 75% of the costs of obtaining ISO-9000/ISO-14001/HACCP certification. It is subjected to a maximum of Rs. 75,000 in each case. Micro and small businesses (MSEs) with a permanent registration are qualified to participate in the incentive program.
Marketing Support/Assistance to MSMEs (Bar Code):
The primary goal of this program is to facilitate small businesses to utilize bar codes. Seminars help educate participants on the necessity of barcoding, and the registration price is compensated to encourage active participation.
Enabling the Manufacturing Sector to be Competitive through Quality Management Standards (QMS) and Quality Technology Tools (QTT)
Quality counts, whether it is a product or a service. As a result, these programs were created to encourage manufacturers to embrace the most up-to-date Quality Management Standards (QMS) and Quality Technology Tools (QTT).
Lean Manufacturing Competitiveness for MSMEs:
Lean is a productivity and work-style improvement technique and has been primarily adopted by successful manufacturing companies. The government has created this scheme in order to bring up and effectively employ Lean in MSMEs.
Design Clinic for Design Expertise to MSMEs:
Any organization that implements innovative design strategies will undoubtedly gain a new dimension. This scheme was created by the ministry to encourage new strategies in MSMEs.
Building Awareness on Intellectual Property Rights (IPR):
Innovative business ideas and tactics should be protected because they will provide your company with a distinct identity. This program focuses on raising awareness among MSMEs related to the need to protect intellectual property rights.
Entrepreneurial and Managerial Development of SMEs through Incubators:
The goal of this program is to approve new ideas in the MSME sector, such as technology, product, procedure, etc. However, they need to be executed in a year.
Promotion of Information & Communication Tools (ICT) in the Indian MSME Sector
The Information and Communication Technology (ICT) scheme is implemented by the ministry. It is to motivate and help MSMEs accept ICT tools and applications in their manufacturing and business procedures. In addition, it increases their productivity and competitiveness in the domestic and international markets.
Technology and Quality Upgradation Support to MSMEs:
Improving your business is an inevitable element of running a successful company. As a result, this program was created to encourage MSME enterprises to take essential steps toward technical and quality development. This strategy primarily focuses on energy-efficient technologies usage in manufacturing, which will dramatically reduce production expenses.
Credit Guarantee Trust Fund for Micro & Small Enterprises (CGTMSE):
This CGTMSE initiative offers credit-guaranteed funds to qualifying beneficiaries from a trust established by the Ministry of MSME and the Small Industries Development Bank of India (SIDBI). It is one of the promising and beneficial schemes for micro and small enterprises.
International Cooperation Scheme:
Though breaking into the foreign market is difficult, it is worthwhile to commit money, time, and effort. The same may be said for the development of MSMEs. The government created this scheme to help MSMEs engage in international events, trade fairs, meetings, conferences, workshops, and other forms of foreign marketing in order to learn more about the industry and to advertise items internationally.