MEDIUM ENTERPRISES: PROFILE

The medium enterprises has been defined for the first time under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, Hence, no firm statistics is available in respect of medium enterprises presently. The statistics relating to medium enterprises would be captured in the 4th All-India Census to be conducted /completed during 2007-09. Informal sources, however, suggest the number of medium enterprises in India to be 10 - 15 thousand. Further, it is estimated that they contribute about 2% to GDP, over 5% to the manufacturing output and around 10% to the national exports.

Infrastructure Development

For setting up of industrial estates and to develop infrastructure facilities like power distribution network, water, telecommunication, drainage and pollution control facilities, roads, banks, raw materials, storage and marketing outlets, common service facilities and technological back up services, etc., for MSMEs, the Integrated Infrastructural Development (IID) Scheme was launched in 1994. The Scheme covers districts, which are not covered under the Growth Centres Scheme. The scheme covers rural as well as urban areas with a provision of 50 per cent reservation for rural areas and 50 per cent industrial plots are to be reserved for the tiny units. The Scheme also provides for upgradation/strengthening of the infrastructural facilities in the existing old industrial estates. The estimated cost to set up an IID Centre is Rs.5 crore (excluding cost of land). Central Government provides 40 per cent (upto a maximum of Rs 2 crore) in case of general States and upto 80% (upto a maximum of Rs.4 crore) for North East Region (including Sikkim), J&K, H.P. and Uttarakhand, as grant and remaining amount could be loan from SIDBI/Banks/Financial Institutions or the State Funds. For the promotion and development of MSEs in the country, cluster approach is one of the thrust areas of the Ministry in the 11th Plan. The IID Scheme has been subsumed under the Micro and Small Enterprise Cluster Development Programme (MSECDP). All the features of the IID Scheme have been retained and will be covered as “New Clusters” under MSECDP.

Technology Upgradation in MSE Sector

The opening up of the economy has exposed MSE sector to global and domestic competition. With a view to enhancing the competitiveness of this sector, the Government has taken various measures, which include: (i) Assistance to Industry Associations for setting up of Testing Centres and to State Governments and their autonomous bodies for modernization/expansion of their Quality Marking Centres; (ii) Regional Testing Centres and Field Testing Stations to provide testing services and services for quality upgradation; (iii) Implementation of Micro and Small Enterprise Cluster Development Programme (MSECDP), under which 91 clusters have been taken up, including National Programme for the Development of toy, stone , machine tools and hand-tool industry in collaboration with UNIDO; (iv) A Scheme of promoting ISO 9000/14001 Certification under which MSEs are given financial support by way of reimbursing 75 per cent of their expenditure to obtain certification subject to a maximum of Rs.75, 000 per unit; and (v) Setting up of Biotechnology Cell in SIDO.

Further, a scheme on Credit Linked Capital Subsidy was launched in the year 2000 to facilitate technology upgradation of Small Enterprises. Under the Scheme, capital subsidy of 12 per cent was provided on institutional finance availed by the MSEs for induction of well established and improved technology in select sub-sectors/products up to a maximum ceiling of Rs.40 lakh. The Scheme has been revised w.e.f. 29th September 2005. Under the revised Scheme, the rate of upfront capital subsidy has been enhanced to 15 per cent and ceiling on loan has been raised

to Rs.1 crore, the admissible capital subsidy is calculated with reference to purchase price of plant and machinery, instead of the term loan disbursed to the beneficiary unit.

Measures Technology Up-gradation in MSE Sector

The opening up of the economy has exposed MSE sector to global and domestic competition. With a view to enhancing the competitiveness of this sector, the Government has taken various measures, which include: (i) Assistance to Industry Associations for setting up of Testing Centers and to State Governments and their autonomous bodies for modernization/expansion of their Quality Marking Centers; (ii) Regional Testing Centers and Field Testing Stations to provide testing services and services for quality up-gradation; (iii) Implementation of Micro and Small Enterprise Cluster Development Programme (MSECDP), under which 91 clusters have been taken up, including National Programme for the Development of toy, stone , machine tools and hand-tool industry in collaboration with UNIDO; (iv) A Scheme of promoting ISO 9000/14001 Certification under which MSEs are given financial support by way of reimbursing 75 per cent of their expenditure to obtain certification subject to a maximum of Rs.75, 000 per unit; and (v) Setting up of Biotechnology Cell in SIDO. Further, a scheme on Credit Linked Capital Subsidy was launched in the year 2000 to facilitate technology up-gradation of Small Enterprises. Under the Scheme, capital subsidy of 12 per cent was provided on institutional finance availed by the MSEs for induction of well established and improved technology in select sub-sectors/products up to a maximum ceiling of Rs.40 lakh. The Scheme has been revised w.e.f. 29th September 2005. Under the revised Scheme, the rate of upfront capital subsidy has been enhanced to 15 per cent and ceiling on loan has been raised to Rs.1 crore, the admissible capital subsidy is calculated with reference to purchase price of plant and machinery, instead of the term loan disbursed to the beneficiary unit.