BUSINESS FINANCE Commerce - - . . PM Micro enterprises are engaged in low scale activities such as clay pot making, fruits and vegetable vendors, transport (three wheeler tempos and autos), repair shops, cottage industries, small industries, handlooms, handicraft works etc. Definition In accordance with the provisions of Micro, Small and Medium Enterprises Development Act , the micro, small and medium enterprises are classified into two classes.
A. Manufacturing Enterprises They refer to the enterprises engaged in the manufacturing or production of goods pertaining to any industry specified in the first schedule to the Industries (Development and Regulation) Act, . The manufacturing enterprises are defined in terms of investment in plant and machinery. B.
Service Enterprises They refer to the enterprises engaged in providing or rendering of services. . Role and Significance of MSMEs . Employment Potential MSMEs generate more employment opportunities than large business concerns.
They are mostly labour intensive, thus they provide more employment opportunities to a larger number of people in India. . Low Production Cost MSMEs do not require skilled labourers or professionals to run the organisation. It employs cheap labour and thus minimizes the overhead.
These units are more cost efficient than large scale units, thus facilitates production of goods at low cost. . Low Investment MSMEs do not require a huge capital to start the unit. It can employ locally available resources within the reach of the owner.
They help to perfect and promote traditional family skills and handicrafts. These industries facilitate the growth of local entrepreneurs and self employed professionals in small towns and villages. . Quick Decision Making MSMEs need not hire professional managers to run the management on a day to day basis.
In most cases, owner himself manages the enterprises. Hence, timely decision making becomes easy and effective. Enterprise Manufacturing sector Service sector (The limit for investment in plant & machinery) (The limit for Investment in Equipments) Micro enterprises Does not exceed ₹ lakhs Does not exceed ₹ lakhs Small enterprises More than ₹ lakhs but not exceeding ₹ Crores More than ₹ lakhs but not exceeding ₹