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A Study on MSMEs’- Role in Propelling Economic …

International Journal of Scientific and Research Publications, Volume 5, Issue 2, February 2015 1. ISSN 2250-3153. A Study on MSMEs'- Role in Propelling Economic development of India & a Discussion on current HR. issues in MSMEs' in India Mrs Ashu Katyal *, Mrs Betsy Xaviour **. *. Assistant Professor-Management Dept., Faculty Of Hospitality Management & Catering Technology(FHMCT), M S Ramaiah University Of Applied Sciences , Bangalore Abstract- MSME (Micro, Small and Medium Enterprises) are the country's GDP, 45 percent of the manufacturing output and 40. heart of Indian Industry. Their contribution especially to a percent of the exports.

International Journal of Scientific and Research Publications, Volume 5, Issue 2, February 2015 1 ISSN 2250-3153 www.ijsrp.org A Study on MSMEs’- Role in Propelling Economic Development of India & a Discussion on current HR

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Transcription of A Study on MSMEs’- Role in Propelling Economic …

1 International Journal of Scientific and Research Publications, Volume 5, Issue 2, February 2015 1. ISSN 2250-3153. A Study on MSMEs'- Role in Propelling Economic development of India & a Discussion on current HR. issues in MSMEs' in India Mrs Ashu Katyal *, Mrs Betsy Xaviour **. *. Assistant Professor-Management Dept., Faculty Of Hospitality Management & Catering Technology(FHMCT), M S Ramaiah University Of Applied Sciences , Bangalore Abstract- MSME (Micro, Small and Medium Enterprises) are the country's GDP, 45 percent of the manufacturing output and 40. heart of Indian Industry. Their contribution especially to a percent of the exports.

2 They provide the largest share of developing country like India is very valuable. They not only employment after agriculture. MSME not only play crucial role contribute in generating employment but also encourage low in providing large employment opportunities at comparatively skilled level workers to start as entrepreneur level in rural areas. lower capital cost than large industries but also help in As data given by Economic Times in June 2013, they employ industrialization of rural & backward areas, thereby, reducing close to 40% of India's workforce. Their main boost is given to regional imbalances, assuring more equitable distribution of Indian Manufacturing industry which is around 45% and export national income and wealth.

3 MSME are complementary to large oriented units which are close to 40%. The MSME sector in India industries as ancillary units and this sector contributes is highly heterogeneous in terms of the size of the enterprises, enormously to the socio- Economic development of the country. variety of products and services, and levels of technology. It They are the nurseries for entrepreneurship and innovation. helps in industrialization of rural and backward areas, reducing They are widely dispersed across the country and produce a regional imbalances and assuring more equitable distribution of diverse range of products and services to meet the needs of the national income and wealth.

4 MSME complement large industries local markets, the global market and the national and as ancillary units and contribute enormously to the international value chains. Entrepreneurship is indispensable to socioeconomic development of the country. MSME manufacture accelerate the industrial growth. Small and Medium enterprises more than 6,000 products ranging from traditional to high tech are an effective means for the development of entrepreneurship. items. Even though contributing so much in industrial growth, This sector is a only solution to the problems of poverty, MSME internal operation is still far behind from the other insecurity, unemployment, over population he modern world.

5 Developed industries. So focus of my paper is the HR operations This article attempted at highlighting the significance MSME in and systems an MSME should have, a minimalist approach Economic development of India. mandates that any business, no matter the scale of operations but At present firms are acknowledging the efficient should have a clear talent philosophy guiding vital talent management of human resources as a critical factor in their management processes like talent acquisition, assessment, success or failure ( , Huselid, Jackson, & Schuler,1997;. development , retention and leadership. Apart from that there are Paauwe, 2004; Schuler & Jackson, 1999).

6 Does this equally so many other challenges like credit to MSME, access to apply to MSME? markets, lack of technological knowledge, lack of proper As MSME focus more on running the business on a day-to- infrastructure etc. To overcome these challenges govt. Of India day basis, they find less time to manage the HR processes which also taken some steps like MSME development Act, 2006 has is perceived as non-priority. MSME do not feel like revamping been enacted to facilitate these units first time and towards existing organizational structure, especially when they know that fulfilling the Credit needs of MSME various schemes have been the status quo is delivering the output.

7 Competitiveness of introduced like Credit Linked Capital Subsidy Scheme MSME can be enhanced through better human resource (HR). (CLCSS). Looking forward for future growth MSME should practices of recruitment, selection, training and compensation. grab opportunities through Globalization and be a messenger for Indian MSME need to reduce overall cost of products to remain Indian industrial growth as well as cultural heritage. competitive with Chinese manufacturers and exporters. Apart from other functional areas such as production, finance, Index Terms- MSMEs, Economic development , GDP, marketing, inventory and logistics, MSME also need to focus on Employment, talent management, credit schemes, MSME Act.

8 Implementing best HR practices. I. INTRODUCTION II. DEFINITIONS OF MICRO, SMALL & MEDIUM. ENTERPRISES. M icro, Small and Medium Enterprises (MSME) sector has emerged as a highly vibrant and dynamic sector of the Indian economy over the last five decades. Micro, Small and As MSME focus more on running the business on a day-to- day basis, they find less time to manage the HR processes which Medium Enterprises (MSME) contribute nearly 8 percent of the is perceived as non-priority. MSME do not feel like revamping International Journal of Scientific and Research Publications, Volume 5, Issue 2, February 2015 2. ISSN 2250-3153. existing organizational structure, especially when they know that competitive with Chinese manufacturers and exporters.

9 Apart the status quo is delivering the output. Competitiveness of from other functional areas such as production, finance, MSME can be enhanced through better human resource (HR) marketing, inventory and logistics, MSME also need to focus on practices of recruitment, selection, training and compensation. implementing best HR practices. Indian MSME need to reduce overall cost of products to remain TABLE 1: MICRO, SMALL AND MEDIUM ENTERPRISE. Nature of the Micro Small Medium Enterprise Enterprise Enterprise Enterprise Manufacturing Investment in initial Investment in initial Investment in initial Sector Fixed assets (plant and Fixed assets (plant Fixed assets (plant Machinery, which And machinery, And machinery, Excludes land & Which excludes land Which excludes land Building) does not & building) more & building) more Exceed Rs.

10 Million Than Rs. million Than million But does not exceed But does not exceed Rs. 50 million Rs. 100 million Service sector Investment in Investment in Investment in Equipment does not Equipment is more Equipment more than Exceed Rs. Than Rs. million Rs. 20 million but Million But does not exceed Does not exceed Rs. Rs. 20 million 50 million (Source: Tabulated by Author). MSME AS GROWTH DRIVER OF INDIAN ECONOMY percent to India's exports. In this setting, Indian msmeare In India, 95 percent of industrial units ( million) are fundamentally important to the Indian Economic system. Their in small-scale sector with a 40 percent value addition in the potential to generate employment, bolster exports and bring manufacturing sector.


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