MSME and Business Entrepreneurship

The MSMED Act was brought into force in 2006. The chapter says: “The MSMED Act, 2006 came into force w.e.f., October, 2006.”

From the table in the chapter, a Micro Enterprise has investment in plant and machinery of ₹1 crore and turnover that does not exceed ₹5 crore.

The chapter says cottage industries are also known as rural industries or traditional industries. They are not defined by capital investment criteria as in the case of other small scale industries.

The chapter defines Village industry as any industry located in a rural area that produces goods or renders services, with or without the use of power, and in which the fixed capital investment per head of artisan or worker is specified by the Central Government from time to time. Khadi industry is included in the MSME sector as one of the traditional village industries.

Any two characteristics from the chapter are sufficient. For example: Systematic activity and Innovation. Entrepreneurship is described as a systematic, step-by-step and purposeful activity, and it is also creative and innovative in nature.

MSME stands for Micro, Small and Medium Enterprises.

The chapter defines entrepreneurship as the process of setting up one’s own business as distinct from pursuing any other economic activity such as employment or practising a profession.

Yes, I agree.

- MSMEs provide ample opportunity for entrepreneurship. The chapter says the latent skills and talents of people can be channelled into business ideas and converted into reality with little capital investment and almost nil formalities.
- Entrepreneurship helps create MSMEs because it involves setting up one’s own business, and the small scale sector allows new ideas, local resources and indigenous skills to be used in practice.

So, entrepreneurship gives birth to MSMEs, and MSMEs in turn encourage entrepreneurship.

MSMEs play a major role in the development of a country because they:

- contribute to balanced regional development;
- are the second largest employers after agriculture;
- generate many jobs with less capital;
- supply a wide variety of products;
- can be set up anywhere using locally available resources, so industrial growth reaches all regions;
- provide opportunities for entrepreneurship;
- enjoy low cost of production and quick decision-making.

Thus, MSMEs support economic growth, employment, exports and rural industrialisation.

The chapter says the Government of India defines MSME based on investment in plant and machinery and turnover.