"MSMEs Are Seedbed for Entrepreneurial Talent"

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The role of micro, small and medium enterprises (MSME) in a developing country like India is very obvious. It helps to generate employment, creating economic activity besides promoting allied development activities. The figures existing in public with respect to MSME sector contribution to India’s development are archaic. Over the years it is stated that MSMEs account for 35 percent of the gross value of manufacturing sector’s output, about 80 percent of the total industrial employment, and about 40 percent of India’s total exports. But in actual terms, it contributes more than 50 percent of the output by manufacturing sector and the employment generation is more than five times to that of the large enterprises. The service sector is one of the fastest growing sectors today.



This is despite hurdles and insufficient support from the government since independence. Most MSMEs are labour intensive and therefore are in a position to generate employment opportunities besides having vast growth potential. The undeveloped and ignored talent is sourced, trained, and gainfully employed by the sector. MSMEs have always been used by the large industries as a platform for sourcing trained manpower. They have an important role in supplementing the bigger industries so that the planned activity of development work is timely attended. They provide the logistic support along with components, accessories and semi finished goods. MSMEs have capability to innovate and commercialize the product at a much lower cost compared to large units. MSMEs provide ample opportunities for the development of technology which in turn creates settings favourable to the development of small units. The entrepreneurs of small units play a strategic role in commercializing new inventions and products. In the process the economy reaps the benefit of improved technology. Most of the MSME entrepreneurs are technocrats having indigenous organizational and management capabilities. They provide productive outlets for the enterprising individuals. These entrepreneurs draw their expertise from skills, training, and knowledge acquired during their working tenure. Some have the urge and risk taking ability based on their confidence in product knowledge. This sector is therefore rightly termed as the seedbed for entrepreneurial talent and a testing ground for new ventures.


Initially delay in administrative approvals, hassles with the financial institutions besides supplier’s non-cooperative attitude creates panic in small business owners. Another big challenge is to supply the product in the market and recover the dues. Generally there is a mismatch between the planned projections and the actual working. If the entrepreneur is not provided with the cushion then his downslide begins. Ability of the entrepreneur is key for the success of any venture. An entrepreneur is a pivot around whom the entire enterprise revolves. The small scale entrepreneurs have to encounter numerous problems relating to over dependence on institutional agencies for funds , lack of creditworthiness, training, lower profitability and host of marketing and other problems. The Government of India has initiated various schemes aimed at improving the overall functioning of these units. Ease of doing business will be primarily needed to help this sector. Government should bring in online filing systems and streamline archaic laws. The entrepreneur should not be made to run after the government system and harassed for no reason. There should be trust-based laws especially in the revenue side of the Government. Moreover, the labour laws needs to be eased besides there should be facilitations instead of inspection and punitive attitude.

(This article was first published in the December issue of Entrepreneur Magazine. To subscribe, click here)

Manguirish Pai Raiker

Written By

Manguirish Pai Raiker is the Chairman, National Council for MSME of Associated Chambers of Commerce and Industry of India (ASSOCHAM).