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1. Micro, Small and Medium Enterprises Development (MSMED) Act, 2006:

The Government of India has enacted the Micro, Small and Medium Enterprises Development
(MSMED) Act, 2006 on June 16, 2006 which was notified on October 2, 2006. With the enactment of
MSMED Act 2006, the paradigm shift that has taken place is the inclusion of services sector in the
definition of Micro, Small and Medium Enterprises, apart from extending the scope to Medium
Enterprises.

Definition of Micro, Small and Medium Enterprises:

The MSMED Act, 2006 defines the Micro, Small and Medium Enterprises based (i) on the investment
in plant and machinery for those engaged in manufacturing or production, processing or preservation
of goods and (ii) on the investment in equipment for enterprises engaged in providing or rendering of
Services.
The investment in plant and machinery is the original cost excluding land and building and other items
specified by the Ministry of Small Scale Industries vide its notification no. S.O.1722 (E) dated
05.10.2006.
The guidelines with regard to investment in plant and machinery or equipment as defined in the
MSMED Act, 2006 are:

Manufacturing Sector
Enterprises Investment in plant & machinery
Micro Enterprises Does not exceed twenty five lakh rupees
Small Enterprises More than twenty five lakh rupees but does not exceed five crore rupees
Medium Enterprises More than five crore rupees but does not exceed ten crore rupees

Service Sector
Enterprises Investment in equipments
Micro Enterprises Does not exceed ten lakh rupees:
Small Enterprises More than ten lakh rupees but does not exceed two crore rupees
Medium Enterprises More than two crore rupees but does not exceed five core rupees
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The investment in plant and machinery is the original cost excluding land and building and other items
specified by the Ministry of Small Scale Industries vide its notification.
The illustrative lists of enterprises that are engaged in providing or rendering services are:

 Small road and water transport operators (original investment in vehicles upto Rs.200.00 lacs under
Priority sector)
 Retail trade (with credit limits not exceeding Rs.20.00 lakhs)
 Small business (whose original cost price of the equipment used for the purpose of business does not
exceed Rs.20.00 lakhs
 Professional and self-employed persons (whose borrowing limits do not exceed Rs.10.00 lakhs of
which not more than Rs.2.00 lakhs should be for working capital requirements except in case of
professionally qualified medical practitioners setting up of practice in semi-urban and rural areas, the
borrowing limits should not exceed Rs.15.00 lakhs with a sub-ceiling of Rs.3 lakhs for working capital
requirements)

Mission & Objectives:

To promote e-Governance for empowering citizens, promoting the inclusive and sustainable growth of
the Electronics, IT & ITeS industries, enhancing India’s role in Internet Governance, adopting a
multipronged approach that includes development of human resources, promoting R&D and
innovation, enhancing efficiency through digital services and ensuring a secure cyber space.
Objectives:
 e-Government: Providing e-infrastructure for delivery of e-services
 e-Industry: Promotion of electronics hardware manufacturing and IT-ITeS industry
 e-Innovation / R&D: Implementation of R&D Framework - Enabling creation of Innovation/ R&D
Infrastructure in emerging
 areas of ICT&E/Establishment of mechanism for R&D translation
 e-Learning: Providing support for development of e-Skills and Knowledge network
 e-Security: Securing India’s cyber space
 e-Inclusion: Promoting the use of ICT for more inclusive growth
 Internet Governance: Enhancing India’s role in Global Platforms of Internet Governance.
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2. Role of governments in developing MSME units:

About the Ministry:

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 & backward areas, thereby, reducing regional imbalances,
assuring more equitable distribution of national income and wealth. MSMEs are complementary to
large industries as ancillary units and this sector contributes enormously to the socio-economic
development of the country.

Organizational Setup:

The M/o MSME is having two Divisions called Small & Medium Enterprises (SME) Division and
Agro & Rural Industry (ARI) Division. The SME Division is allocated the work, inter- alia, of
administration, vigilance and administrative supervision of the National Small Industries Corporation
(NSIC) Ltd., a public sector enterprise and the three autonomous national level entrepreneurship
development/training originations. The Division is also responsible for implementation of the schemes
relating to Performance and Credit Rating and Assistance to Training Institution, among others. SME
Division is also responsible for preparation and monitoring of Results- Framework Document (RFD)
as introduced in 2009 by the Cabinet Secretariat under Performance Monitoring and Evaluation
System (PMES). The ARI Division looks after the administration of two statutory bodies viz. the
Khadi and Village Industries Commission (KVIC), Coir Board and a newly created organization
called Mahatma Gandhi Institute for Rural Industrialization (MGIRI). It also supervises the
implementation of the Prime Minister's Employment Generation Programme (PMEGP).

Office of the Development Commissioner [MSME]:

The Micro, Small and Medium Enterprises- Development Organisation (MSME-DO) is headed by the
Additional Secretary & Development Commissioner (MSME). The Office of the Development
Commissioner (Micro, Small & Medium Enterprises) assists the Ministry in formulating, co-
ordinating, implementing and monitoring different policies and programmes for the promotion and
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development of MSMEs in the country. In addition, it provides a comprehensive range of common

facilities, technology support services, marketing assistance, etc. through its network of 30 Micro,
Small and Medium Enterprises-Development Institutes (MSME-Dls); 28 Branch MSME-Dls; 4
MSME Testing Centres (MSME-TCs); 7 MSME-Testing Stations (MSME-TSs); 2 MSME-Training
Institutes (MSME-Tls); and 1 MSME-Technology Development Center-Hand Tools (MSME-TDC-
Hand Tools). The % DC (MSME) also operates a network of Tool Rooms and Technology
Development Centres (including 2 Footwear Training Institutes) which are autonomous bodies
registered as Societies under the Societies Act. The Office implements a number of schemes for the
MSME sector, the details of which have been duly incorporated in the booklet.
Khadi & Village Industries Commission:

The Khadi & Village Industries Commission (KVIC), established under the Khadi and Village
Industries Commission Act, 1956 (61 of 1956), is a statutory organization engaged in promoting and
developing khadi and village industries for providing employment opportunities in rural areas, thereby
strengthening the rural economy. The Commission is headed by full time Chairman and consists of 10
part-time Members. The KVIC has been identified as one of the major organizations in the
decentralized sector for generating sustainable rural non-farm employment opportunities at a low per
capita investment. This also helps in checking migration of rural population to urban areas in search of
the employment opportunities. The main functions of the KVIC are to plan, promote, organize and
assist in implementation of the programmes/projects/schemes for generation of employment
opportunities through development of khadi and village industries. Towards this end, it undertakes
activities like skill improvement, transfer of technology, research & development, marketing, etc.
KVIC co-ordinates its activities through State KVI boards, registered societies and cooperatives. It has
under its aegis a large number of industry-specific institutions spread in various parts of the country.

Coir Board:

The Coir Board is a statutory body established under the Coir Board Industry Act, 1953 (NO. 45 of
1953) for promoting overall development of the coir industry and improving the living conditions of
the workers engaged in this traditional industry. The Coir Board consists of a full-time Chairman and
39 part- time Members. The activities of the Board for development of coir industries, inter-alia
include undertaking scientific, technological and economic research and development activities;
collecting statistics relating to exports and internal consumption of coir and coir products; developing
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new products and designs; organizing publicity for promotion of exports and internal sales; marketing
of coir and coir products in India and abroad; preventing unfair competition between producers and
exporters; assisting the establishment of units for manufacture of the products; promoting co-operative
organization among producers of husks, coir fibre, coir yarn and manufactures of coir products;
ensuring remunerative returns to producers and manufacturers, etc.

The Board has promoted two research institutes namely, Central Coir Research Institute (CCRI),
Kalavoor, Alleppey, and Central Institute of Coir Technology (CICT), Bengalooru for under taking
research activities on different aspects of coir industry which is one of the major agro based rural
industries in the country. The two major strengths of the coir industry are it being export oriented and
generating wealth out of the waste (coconut husk).

National Small Industries Corporation Limited (NSIC):

 -> NSIC, established in 1955, is headed by Chairman-cum-Managing Director and managed by a
Board of Directors.

 -> The main function of the Corporation is to promote, aid and foster the growth of micro and small
enterprises in the country, generally on commercial basis.

 -> NSIC provides a variety of support services to micro and small enterprises catering to their different
requirements in the areas of raw material procurement; product marketing; credit rating; acquisition of
technologies; adoption of modern management practices, etc.

NSIC implements its various programs and projects throughout the country through its 9 Zonal
Offices, 39 Branch Offices, 12 Sub Offices, 5 Technical Services Centers, 3
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3. Backward area:

INTRODUCTION:
Traditionally the backward area is an area where there is no industrial development. But the
concept of backwardness itself has undergone change. In 1960s & 70s backwardness was measured on
the basis of techno-economic parameters but contemporary definition of backwardness includes social
and ecological aspects also Regional disparities have started widening because of ill-conceived
investment programs effected under the colonial rule and also due to lack of attention paid to the need
for micro level plans. Therefore, far the promotion of balanced regional development, it is essential to
devise suitable planning model and policies. In India, regional development and planning began with
macro-regions and shifted, recently, to the micro-regions. Equitability of opportunity, positive
transformation, deep rooted and engulf mobilization of local resources and general self-reliance for
self-sufficiency axe matter of focus.
The biggest challenge of backward area management is how to identify which are the
backward areas for development. Even now we have not accepted the precise definition of the
backwardness. But we understand that backwardness is a problem & India has lots of backward
pockets. The concern for regional growth and backward area development in the country found
expression only in qualitative terms in the first phase of the planning period up to the mid-sixties. In
the 1960s, planning commission recommended setting up of small scale industries board for
encouraging industrial development in backward areas but the decisive efforts were initiated in 1968
when on the recommendation of National Development Council, 2 committees were set up for
identifying backward areas and for addressing backwardness.