2.61 crore MSMEs in 2006-2007 – reveals the 4th census of Micro, Small and Medium Enterprises
(Press Information Bureau) The Quick results of 4th All India Census of MSMEs (2006-07) have become available. The results reveal that there are a total number of 2.61 crore MSMEs in 2006-07 (as against the current projected figure of 1.3 crore). This includes 0.15 crore registered units and 2.46 crore un-registered units. Of the total, 28% are in manufacturing and 72% in services. These units are largely in Apparel (14.03 %) followed by Food Products and Beverages (13.53%) and Maintenance of Personal and Household goods (9.25%). The MSME sector accounts for employment of 5.97 crore persons, of which, 0.95 crore are in registered units and 5.03 crore in the un-registered units. The Data on registered units reveals that closure among MSMEs has decreased from the 39% in 2001-02 to 21.64% in 2006-07. Sickness in MSMEs has increased marginally from 13.98% in 2001-02 to 14.47% in 2006-07. Sickness is found to be largely on account of lack of demand and shortage of working capital. The data also reveals that the per unit employment has increased from 4.48 in 2001-02 to 6.24 in 2006-07, per unit fixed investment from Rs.6.68 lakh to Rs.33.78 lakh and per unit gross output from Rs.14.78 lakh to Rs.46.13 lakh in order of priority. Once the survey of unregistered units is completed, information will become available in respect of gross output, investment, outstanding loans, sickness, exports, etc. This data will also include information on KVIC and Coir units. This is the first Census after change in definition of the sector and includes, for the first time, medium enterprises and services. For purposes of the Census, an enterprise is defined as a unit with fixed premises and hence does not include hawkers, road side vendors, etc. The 3rd All-India Census of Small Scale Industries with reference year 2001-02 was completed in the year 2003. The 4th All-India Census of MSMEs was launched in May 2008 and its field work was completed in March 2009. This required collection of data for 24 lakh registered units and around 4 lakh unregistered units. The Census was done in cooperation with the State/UT Governments. Statistics pertaining to the sector play an important role for policy formulation on credit, marketing, technology, entrepreneur development and infrastructure development. The findings of the Census will have utility for planners, administrators, academicians, industrialists, entrepreneurs and all other stakeholders in the promotion and development of MSMEs. The quick results are based on a census of all registered units conducted by the Office of DC (MSME) and Economic Census of un-registered units conducted by Central Statistical Organisation. The Sample Survey of unregistered units by the Office of DC (MSME) is under way and is expected to be completed shortly. This will provide complete information on the MSME sector.
Sunday 6 September 2009
MSME
FDI cap redefined for 26 million MSMEs employing 60 million
Government of India
Ministry of Commerce & Industry
Department of Industrial Policy & Promotion
(FC Section)
Press Note No.6 (2009)
Subject: Foreign Direct Investment (FDI) into a Small Scale Industrial
Undertaking (SSI)/ Micro & Small Enterprises (MSE) and in Industrial
Undertaking manufacturing items reserved for SSII MSE - clarification.
1.0 FDI into SSIIMSE
1.1 A Small Scale industrial undertaking (SSI) was defined in terms of: (i) investment in
fixed assets in plant and machinery and (ii) equity participation (both domestic and foreign) in the SSI, by other industrial undertakings prior to 2006.
1.2 Vide Press Note 18 (1997), it was further notified that, for cases of foreign
collaborations, since the maximum equity participation allowed for in small scale units was 24%, proposals for induction of foreign equity more than 24% would be subject to the condition that: (i) the company would get itself de-registered as a small scale unit and (ii) obtain industrial licence or file Industrial Entrepreneur Memorandum with SIA, as per prescribed policy and procedure.
1.3 With the promulgation of the Micro, Small and Medium Enterprises Development
(MSMED) Act, 2006, the ceiling for equity participation (both domestic and foreign) in the
micro and small enterprises, by other enterprises, was removed and Micro and Small
Enterprises (MSE) (earlier small scale industries) were defined solely on the basis of
investment in plant & machinery (for micro and small enterprise engaged in manufacturing) and equipment (for micro and small enterprise engaged in providing or rendering of services). Accordingly, this change was notified by Notification No. S.O. 563(E) dated 27th February 2009 of Department of Industrial Policy & Promotion, Ministry of Commerce & Industry.
1.4 Thus the present policy on FDI in MSE permits FDI subject only to the sectoral
equity caps, entry routes and other relevant sectoral regulations.1.5 Press Note 18 (1997 series) stands modified to the above extent.
2.0 FDI in Industrial Undertaking manufacturing items reserved for SSIIMSE
2.1 Vide Press Note 14 (1997), it was notified that Industrial Undertakings manufacturing items reserved for small scale sector were not eligible for automatic approval for induction of foreign investment.
2.2 Accordingly, the FDI policy notified vide Press Note 2 (2000) prescribed prior approval of Government where foreign investment was more than 24% in the equity capital of units manufacturing items reserved for small scale industries. This was reiterated in the Annex to Press Note 4 (2006) and at Para III (ii) of Annex to Press Note 7 (2008).
2.3 Thus, any industrial undertaking, with or without FDI, which is not a MSE, manufacturing items reserved for manufacture in the MSE sector (presently 21 items) as per the Industrial Policy, would require an Industrial License under the Industries (Development & Regulation) Act, 1951, for such manufacture. The issue of the Industrial Licence will be subject to a few general conditions and the specific condition that the undertaking shall undertake to 'export a minimum of 50% of the new or additional annual production of the MSE reserved items to be achieved within a maximum period of three years. The export obligation would be applicable from the date of commencement of commercial production'. Such an industrial undertaking would also require prior approval of the Government (FIPB) where foreign investment is more than 24% in the equity capital.
Signed by/-
Joint Secretary to the Government of IndiaF. No. 5(10)/2009-FC Dated 04/09/2009
Government of India
Ministry of Commerce & Industry
Department of Industrial Policy & Promotion
(FC Section)
Press Note No.6 (2009)
Subject: Foreign Direct Investment (FDI) into a Small Scale Industrial
Undertaking (SSI)/ Micro & Small Enterprises (MSE) and in Industrial
Undertaking manufacturing items reserved for SSII MSE - clarification.
1.0 FDI into SSIIMSE
1.1 A Small Scale industrial undertaking (SSI) was defined in terms of: (i) investment in
fixed assets in plant and machinery and (ii) equity participation (both domestic and foreign) in the SSI, by other industrial undertakings prior to 2006.
1.2 Vide Press Note 18 (1997), it was further notified that, for cases of foreign
collaborations, since the maximum equity participation allowed for in small scale units was 24%, proposals for induction of foreign equity more than 24% would be subject to the condition that: (i) the company would get itself de-registered as a small scale unit and (ii) obtain industrial licence or file Industrial Entrepreneur Memorandum with SIA, as per prescribed policy and procedure.
1.3 With the promulgation of the Micro, Small and Medium Enterprises Development
(MSMED) Act, 2006, the ceiling for equity participation (both domestic and foreign) in the
micro and small enterprises, by other enterprises, was removed and Micro and Small
Enterprises (MSE) (earlier small scale industries) were defined solely on the basis of
investment in plant & machinery (for micro and small enterprise engaged in manufacturing) and equipment (for micro and small enterprise engaged in providing or rendering of services). Accordingly, this change was notified by Notification No. S.O. 563(E) dated 27th February 2009 of Department of Industrial Policy & Promotion, Ministry of Commerce & Industry.
1.4 Thus the present policy on FDI in MSE permits FDI subject only to the sectoral
equity caps, entry routes and other relevant sectoral regulations.1.5 Press Note 18 (1997 series) stands modified to the above extent.
2.0 FDI in Industrial Undertaking manufacturing items reserved for SSIIMSE
2.1 Vide Press Note 14 (1997), it was notified that Industrial Undertakings manufacturing items reserved for small scale sector were not eligible for automatic approval for induction of foreign investment.
2.2 Accordingly, the FDI policy notified vide Press Note 2 (2000) prescribed prior approval of Government where foreign investment was more than 24% in the equity capital of units manufacturing items reserved for small scale industries. This was reiterated in the Annex to Press Note 4 (2006) and at Para III (ii) of Annex to Press Note 7 (2008).
2.3 Thus, any industrial undertaking, with or without FDI, which is not a MSE, manufacturing items reserved for manufacture in the MSE sector (presently 21 items) as per the Industrial Policy, would require an Industrial License under the Industries (Development & Regulation) Act, 1951, for such manufacture. The issue of the Industrial Licence will be subject to a few general conditions and the specific condition that the undertaking shall undertake to 'export a minimum of 50% of the new or additional annual production of the MSE reserved items to be achieved within a maximum period of three years. The export obligation would be applicable from the date of commencement of commercial production'. Such an industrial undertaking would also require prior approval of the Government (FIPB) where foreign investment is more than 24% in the equity capital.
Signed by/-
Joint Secretary to the Government of IndiaF. No. 5(10)/2009-FC Dated 04/09/2009
Sunday 25 May 2008
ICRIER Report Card: Less Research More Politics
Dear Friends,
Executive Summary of the ICRIER Report
The much awaited ICRIER Research, ordered by PMO at the behest of Sonia Gandhi letter, on the impact of Corporate Retail on small shopkeepers and vendors, is reported to finally being submitted to Ministry of Commerce on 26th May, 2008. According to the executive summary of the report, which is already in possession of India FDI Watch, the real GDP is expected to grow at 8-10 per cent per annum in the next five years. As a result, the consuming class with annual household incomes above Rs. 90,000 is expected to rise from about 370 million in 2006-07 to 620 million in 2011-12. Consequently, the retail business in India is estimated to grow at 13 per cent annually from US$322 billion in 2006-07 to US$590 billion in 2011-12. In other words, the report believes that there are 37 crore middle class people in India and the number will rise to 62 crore in next 3-4 years and is banking on further raising their wasteful consumerist quest to fuel the retail business. However, the great Indian middle class on which they are banking is really missing. The data is misleading and far from the truth.
The data collected by National Sample Survey Organization (NSSO) in 2004-05 and the 2007 report of the National Commission for Enterprises in the Unorganised Sector (Arjun Sengupta Commission) is definitely believed to be among most comprehensive surveys on employment-unemployment and consumption expenditure. The NSSO surveys collect data on consumption from each of the selected sample households in a detailed schedule containing a list of every conceivable item of consumption ranging from edibles to fuels to clothing and consumer durables, and also include educational and medical goods and services. Based on these extensive datasets, the NCEUS computed the monthly per capita consumption expenditure (MPCE) and daily per capita consumption expenditure (DPCE) in an effort to evaluate the performance of the economy in terms of the consumption expenditure. The result is alarming.
Almost 77 per cent Indians [the extremely poor (6.4%), the poor (15.4%), the marginal (19%) and vulnerable (36%)] on an average subsist on less than Rs 20 per day. Forget about the middle class, even the high income group just constitute 4% of the population. And even this group has an average daily consumption of Rs 93 only. So, where are the 370 million people to whom Corporations are eying for?
Any way, coming back to the ICRIER report, the corporate retail is projected to grow at the rate of 45-50 per cent per annum, whereas the retail business overall is estimated to grow only at 13 per cent annually. It is crystal clear that the alarming rise of the corporate retail will be only at the cost of millions of people employed in the present retail sector. The ICRIER research is also short sighted and does not take into account the long term impact on farmers, manufacturers, consumers. It also did not study the socio, cultural and environmental impact of corporate retail.
The research findings are based on a survey of 2020 unorganized small retailers across 10 major cities; 1318 consumers shopping at both organized and unorganized retail outlets; 100 intermediaries; and only 197 farmers. A control sample survey was also done of 805 unorganized retailers who are not in the vicinity of unorganized retail outlets in four metro cities. Detailed interviews were also carried out for 12 large manufacturers, 20 small manufacturers and six established corporate retailers.
Main Findings
- Unorganized retailers in the vicinity of organized retailers experienced a decline in their volume of business and profit in the initial years after the entry of large organized retailers
- the adverse impact on sales and profit weakens over time
- there is some decline in employment in the north and west regions which, however, also weakens over time
- the rate of closure of unorganized retail shops in gross terms is found to be 4.2 per cent per annum
- the rate of closure on account of competition from organized retail is at 1.7 per cent per annum
- small retailers have been extending more credit to attract and retain customers
- most unorganized retailers are committed to remaining independent and barely 10 per cent preferred to become franchisees of organized retailers
Policy Recommendations
- Modernization of wetmarkets through public-private partnerships
- Facilitate cash-and-carry outlets
- Encourage co-operatives and associations of unorganized retailers for direct procurement from suppliers and farmers
- Facilitate the formation of farmers cooperatives to directly sell to organized retailers
- Encourage formulation of private codes of conduct by organized retail for dealing with small suppliers, these may be then be incorporated into enforceable legislation
- Strengthening the Competition Commission role for enforcing rules against collusion and predatory pricing
- Modernization of APMC markets as modeled on the National Dairy Development Board (NDDB) Safal markets in Bangalore
In Solidarity!
Dharmendra Kumar
Director
India FDI Watch
M-9871179084
Email:
dkfordignity@yahoo.co.ukdkfordignity@gmail.com
Executive Summary of the ICRIER Report
The much awaited ICRIER Research, ordered by PMO at the behest of Sonia Gandhi letter, on the impact of Corporate Retail on small shopkeepers and vendors, is reported to finally being submitted to Ministry of Commerce on 26th May, 2008. According to the executive summary of the report, which is already in possession of India FDI Watch, the real GDP is expected to grow at 8-10 per cent per annum in the next five years. As a result, the consuming class with annual household incomes above Rs. 90,000 is expected to rise from about 370 million in 2006-07 to 620 million in 2011-12. Consequently, the retail business in India is estimated to grow at 13 per cent annually from US$322 billion in 2006-07 to US$590 billion in 2011-12. In other words, the report believes that there are 37 crore middle class people in India and the number will rise to 62 crore in next 3-4 years and is banking on further raising their wasteful consumerist quest to fuel the retail business. However, the great Indian middle class on which they are banking is really missing. The data is misleading and far from the truth.
The data collected by National Sample Survey Organization (NSSO) in 2004-05 and the 2007 report of the National Commission for Enterprises in the Unorganised Sector (Arjun Sengupta Commission) is definitely believed to be among most comprehensive surveys on employment-unemployment and consumption expenditure. The NSSO surveys collect data on consumption from each of the selected sample households in a detailed schedule containing a list of every conceivable item of consumption ranging from edibles to fuels to clothing and consumer durables, and also include educational and medical goods and services. Based on these extensive datasets, the NCEUS computed the monthly per capita consumption expenditure (MPCE) and daily per capita consumption expenditure (DPCE) in an effort to evaluate the performance of the economy in terms of the consumption expenditure. The result is alarming.
Almost 77 per cent Indians [the extremely poor (6.4%), the poor (15.4%), the marginal (19%) and vulnerable (36%)] on an average subsist on less than Rs 20 per day. Forget about the middle class, even the high income group just constitute 4% of the population. And even this group has an average daily consumption of Rs 93 only. So, where are the 370 million people to whom Corporations are eying for?
Any way, coming back to the ICRIER report, the corporate retail is projected to grow at the rate of 45-50 per cent per annum, whereas the retail business overall is estimated to grow only at 13 per cent annually. It is crystal clear that the alarming rise of the corporate retail will be only at the cost of millions of people employed in the present retail sector. The ICRIER research is also short sighted and does not take into account the long term impact on farmers, manufacturers, consumers. It also did not study the socio, cultural and environmental impact of corporate retail.
The research findings are based on a survey of 2020 unorganized small retailers across 10 major cities; 1318 consumers shopping at both organized and unorganized retail outlets; 100 intermediaries; and only 197 farmers. A control sample survey was also done of 805 unorganized retailers who are not in the vicinity of unorganized retail outlets in four metro cities. Detailed interviews were also carried out for 12 large manufacturers, 20 small manufacturers and six established corporate retailers.
Main Findings
- Unorganized retailers in the vicinity of organized retailers experienced a decline in their volume of business and profit in the initial years after the entry of large organized retailers
- the adverse impact on sales and profit weakens over time
- there is some decline in employment in the north and west regions which, however, also weakens over time
- the rate of closure of unorganized retail shops in gross terms is found to be 4.2 per cent per annum
- the rate of closure on account of competition from organized retail is at 1.7 per cent per annum
- small retailers have been extending more credit to attract and retain customers
- most unorganized retailers are committed to remaining independent and barely 10 per cent preferred to become franchisees of organized retailers
Policy Recommendations
- Modernization of wetmarkets through public-private partnerships
- Facilitate cash-and-carry outlets
- Encourage co-operatives and associations of unorganized retailers for direct procurement from suppliers and farmers
- Facilitate the formation of farmers cooperatives to directly sell to organized retailers
- Encourage formulation of private codes of conduct by organized retail for dealing with small suppliers, these may be then be incorporated into enforceable legislation
- Strengthening the Competition Commission role for enforcing rules against collusion and predatory pricing
- Modernization of APMC markets as modeled on the National Dairy Development Board (NDDB) Safal markets in Bangalore
In Solidarity!
Dharmendra Kumar
Director
India FDI Watch
M-9871179084
Email:
dkfordignity@yahoo.co.ukdkfordignity@gmail.com
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