‘MSME’ Sector In India(GS-3 Mains Exam Synopsis)2020-21(UPSC)


What is MSME? Prime Minister Narendra Modi has launched Micro, Small and Medium Enterprises (MSME) Support and Outreach Programme.

  • MSME Development (MSMED) Act, 2006 classifies MSMEs based on the Investment in plant and machinery for manufacturing units and investment in equipment for service enterprises.
  • But in February 2018, the Union Cabinet approved the amendment to MSMED Act, 2006 for classifying MSMEs from current investment in plant and machinery criteria to annual turnover criteria. Accordingly,

Micro Enterprise: Annual turnover does not exceed Rs. 5 Crore Investment < Rs. 1 Crore And Turnover < Rs. 5 Crore

Small Enterprise: Annual turnover between Rs. 5 crore – Rs. 75 crore. Investment < Rs. 10 Crore And Turnover < Rs. 50 Crore

Medium Enterprise: Annual turnover between Rs. 75 crore – Rs. 250 crore. Investment < Rs. 20 Crore And Turnover < Rs. 100 Crore

What is the importance of MSMEs ?

What are the challenges faced by the MSME sector?

Employment creator;

Economic growth and exports & Inclusive growth

      • Lack of scaling up and expansion or confined to the rural area  
      • Access to capital
      • Lack of latest techs
      • Deficiencies in basic infrastructural facilities
      • Bureaucratic red tape
      • Lack of skilled labour
      • Raw material availability
What are the measures taken by the government?
    • MSMED Act of 2006 
    • Trade Receivable Discounting System (TReDS)
    • Technology Acquisition and Development Fund (TADF)
    • The National Apprenticeship Promotion Scheme
    • Indian Enterprise Development Service (IEDS)
    • Trade   Related   Entrepreneurship   Assistance    and    Development   (TREAD)
    • Zero Defect-Zero Effect (ZED) Scheme
    • Mudra Bank
    • MSME Sambandh
    • PSBs as Udyami Mitras
    • Udyami Mitra Portal
    • 2018 Amendment to MSME Act 2006
    • MSME Samadhaan
    • Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)
    • Credit linked Capital Subsidy Scheme
    • minimum threshold to initiate insolvency proceedings, now, Rs 1 crore
    • Subordinate debt for NPA/stressed MSMEs
    • Fund of Funds for MSMEs
    • No global tenders in Government procurement up to Rs. 200 Crore.
What are the key features of MSME Outreach Programme 2018?
  • Access to Facilities 
  • Access to Credit
  • Interest Subvention
  • TReDS
  • Market access
  • Technology Up gradation
  • Ease of Doing Business
  • Social Security for MSME sector employees


  1. ‘Credit Guarantee Schemes only leads to moral hazards in an economy.’ Critically analyze the statement in light of MSMEs in India.
  2. Why countries support the MSMEs in the economy which often causes fund crunches in the financial sector? Examine the move of creation of Funds of fund by the Indian Government.
  3. Critically examine the MSMEs Outreach Program of Central government.                                                                                                                            Telegram  https://t.me/diademyiasEmail : contact@diademy.com         011-41561002

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