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Definition of small scale as per MSMED act 2006, Rationale, Objectives, Scope

A small enterprise is an enterprise where the investment in plant and machinery is more than Rs. 25 lakh but does not exceed Rs. 5 crore.





  • Promoting competitiveness and productivity in the MSME space.
  • Making the MSME sector innovative, improving technology and depth.
  • Enabling environment for promotion and development of MSMEs.
  • Strong presence in exports.
  • Improved managerial processes in MSMEs.


Reasons behind growth in SME business 

There are various reasons due to which the small scale business in India has witnessed a spurt of growth. Some of these factors are: 

•    High contribution to domestic production
•    Low investment requirements
•    Significant export earnings
•    Capacities to develop appropriate indigenous technology
•    Operational flexibility
•    Contribution towards defense production
•    Technology – oriented industries
•    Import substitution
•    Location wise mobility
•    Low intensive imports
•    Competitiveness in the domestic market
•    Competitiveness in the export markets

The India small business opportunity is getting quite exciting and innovative with the passing of every year. There are a lot of retail business ideas for entrepreneurs who are interested to set up a SME business in India. However, investors planning to invest in this sector must ensure that they make a wide choice and use the resources available in the right way to reap the benefits.



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