MSME CLASSIFICATION AND
OPPORTUNITIES FOR RURAL
ENTREPRENEURSHIP - KVIC
CLASSIFICATION, STARTUP AND
BUSINESS INCUBATORS
Dr. M. Umamageswari
Assistant Professor (Agricultural Economics)
JSA College of Agriculture & Technology
(Affiliated to Tamil Nadu Agricultural University)
Ma. Podaiyur, Tittagudi Tk. , Cuddalore District – 606 108

Micro, Small and Medium
Enterprises
 MSME has emerged as a highly vibrant and
dynamic sector of the Indian economy few
decades.
 MSMEs play crucial role in providing large
employment opportunities at comparatively
lower capital cost than large industries.
 It also help in industrialization of rural &
backward areas, thereby, reducing regional
imbalances, assuring more equitable
distribution of national income and wealth.

Micro, Small & Medium Enterprises
Development (MSMED) Act, 2006 – Two
classes
Nature of
activity
of the
Enterprise
Manufacturing Sector Service Sector
Investment in Plant and
Machineries
Investment in Equipments
Micro Not exceeding Rs.25.00 Lakhs Not exceeding Rs.10.00 Lakhs
Small
More than Rs.25.00 lakhs but doe
s not exceed Rs. 5 Crore
More than Rs.10.00 lakhs but
does not exceed Rs.2.0 Crore
Medium
More than Rs. 5 Crore but does
not exceed Rs.10.00 Crore
More than Rs.2.0 Crore but
does not exceed Rs.5.0 Crore

Technology Centres (Earlier known
as Tool Room & Technical Institutions)
 To provide right stimulus to the growth of
industry in the country – particularly to
MSME, Ministry has establishedTechnology
Centers across India, many of them through
bilateral collaboration of the Governments of
Germany & Denmark and the United
Nations.

Contd...
 Out of 18Technology Centres (TCs), the 10
TCs (earlier known asTool Rooms) provide
technological support to industries through
design & manufacture of tools, precision
components, moulds, dies, etc.
 TCs also serve industry by providing skilled
manpower in the areas of tool engineering &
manufacturing sector.

 The remainingTechnology Centres, (earlier
known asTechnology Development Centres)
are product specific Centres to support
MSMEs in the respective sectors by rendering
technical services to develop and upgrade
technologies, processes and products apart
from training in the specific product groups
such as Forging &Foundry, Electronics,
Electrical Measuring Instruments, Fragrance
& Flavour, Glass, Footwear &Sport Goods.

Other important implementing
agencies
 National Small Industries Corporation (NSIC),
 Khadi andVillage Industries Commission
(KVIC)
 The Coir Board
 Training institute viz., National Institute for
Micro, Small and Medium Enterprises (NI-
MSME), Hyderabad
 Mahatma Gandhi Institute for Rural
Industrialization (MGIRI),Wardha - a society

National Board for Micro,
Small and Medium Enterprises
(NBMSME)
 It examines the factors affecting promotion
and development of MSMEs, reviews existing
policies and programmes and makes
recommendations to the Government in
formulating the policies and programmes for
the growth of MSMEs.

Role of MSMEs in Indian
Economy
 Contributing significantly to the expansion of
entrepreneurial endeavours through business
innovations
 Producing diverse range of products and
services to meet demands of domestic as well
as global markets

Performance of MSMEs
 MSME Sector as of the estimated number of
633.92 lakh enterprises, only 4000
enterprises were large
 As per the Sixth Economic Census (2013), 58.5
million establishments were found to be in
operation. 34.8 million establishments
(59.48%) were found in rural areas and nearly
23.7 million establishments (40.52%) were
found to be located in urban areas.

Opportunities for rural
entrepreneurship
 India has a rich history of rural entrepreneurship
in traditional industries such as coir, khadi,
bamboo, cane, and more.
 Government bodies such as the MSME Ministry
have been running various schemes to support
and grow these industries.
 These schemes range from providing collateral-
free credit and access to incubation centres to
better equipment and employment
opportunities for entrepreneurs in various
corners of India.

Contd…
 Finance Minister Nirmala Sitharaman's
maiden Budget presented in Parliament on
July 5, 2019 focussed on reviving traditional
industries such as bamboo, khadi and
honey, through a cluster-based approach.
 "A hundred new clusters for traditional
industries will be created in 2019-20, and this
will allow 50,000 artisans to join the
economic value chain," she said.

Contd..
 Scheme of Fund for Regeneration ofTraditional
Industries (SFURTI)
 Aims to organise such industries and artisans into clusters to
make them competitive and provide support for their long-
term sustainability, sustained employment, and enhanced
marketability of products.
 Besides SFURTI, the government's focus lies on schemes
such as Prime Minister’s Employment Generation
Programme (PMEGP), Scheme for Promotion of
Innovation, Rural Industry and Entrepreneurship
(ASPIRE), Credit Guarantee Scheme for Micro and Small
Enterprises (CGTMSE), and more.

Handicraft industry

Handicraft …

Assam Bamboo Crafts

Football Industry – West
Bengal

Gujarati Sarees
kantha embroidery
Jaipur Rugs
Terracotta-pots at Kolkata

Firozabad - The City of Glass Bangles Industry

Paper Mache industry

Khadi Village
Industries
Commission
(KVIC)
 KVIC established under the Khadi andVillage
Industries Commission Act, 1956 (61 of 1956),
is a statutory organization under the aegis of
the Ministry of MSME.

Objectives:
 The social objective of providing employment
in rural areas;
 The economic objective of producing saleable
articles; and
 The wider objective of creating self-reliance
amongst people and building up a strong
rural community spirit.

The functions and duties of
the KVIC
 The functions of the Commission shall
generally be to plan, promote, organize and
assist in the establishment and development
of khadi and village industries in the rural
area in coordination with other agencies
engaged in rural development wherever
necessary.

KVIC Functions
 to plan and organize training of persons employed or
desirous of seeking employment in khadi and village
industries;
 to build up reserves of raw material and implements and
supply them to persons engaged or likely to be engaged in
production of handspun yarn or khadi or village industries
at such rates as the Commission may decide;
 to encourage and assist in the creation of common
service facilities for the processing of raw material or semi-
finished goods and for otherwise facilitating production
and marketing of khadi or products of village industries;
 to promote the sale and marketing of khadi or products of
village industries or handicrafts and for this purpose to
forge links with established marketing agencies wherever
necessary and feasible;

 to encourage and promote research in the technology used
in khadi and village industries, including the use of non-
conventional energy and electric power with a view to
increasing productivity, eliminating drudgery and
otherwise enhancing their competitive capacity and to
arrange for dissemination of salient results obtained from
such research;
 to undertake directly or through other agencies studies of
the problems of khadi and village industries;
 to provide financial assistance to institutions or persons
engaged in the development and operation of khadi and
village industries and guide them through supply of
designs, prototypes and other technical information for the
purpose of producing goods and services for which there is
effective demand in the opinion of the Commission;
KVIC Functions

 to undertake experiments or pilot projects which in the opinion
of the Commission are necessary for the development of khadi
and village industries;
 to establish and maintain separate organizations for the purpose
of carrying out any or all of the aforesaid matters;
 to promote and encourage cooperative efforts among the
manufacturers of khadi or persons engaged in village industries;
 to ensure genuineness and to set up standards of quality and
ensure that products of khadi and village industries do conform
to the said standards, including issue of certificates or letters of
recognition to the concerned persons; and
 to promote cooperative efforts;
 to carry out any other matters incidental to the above.
KVIC Functions

Startup

Startup India
 Startup India Scheme is an initiative of
the Indian government, the primary objective of
which is the promotion of startups, generation
of employment, and wealth creation.
 The goal of Startup India is the development and
innovation of products and services and
increasing the employment rate in India.
 It was launched on the 16th of January, 2016 by
Prime Minister Narendra Modi atVigyan
Bhawan, New Delhi.

Benefits of Startup India
Scheme
 Simplification of Work
 Finance support
 Registration Benefits
 Government tenders
 Networking opportunities.

1.Simplification of Work
 Firstly, the government has set-up Startup India
hubs where all the works related to incorporation,
registration, grievance handling, etc.
 Secondly, an application and an online portal is set-
up by the government to facilitate registration from
anywhere and anytime.
 Thirdly, the patent acquisition and registration is
now fast for the startups.
 Lastly, according to the Insolvency and Bankruptcy
Bill, 2015 facilitates fast winding up of the startups. A
new startup can wind-up itself within 90 days of the
incorporation.

2. Finance Support
 The government has set up a corpus of
Rs.10,000 crores for 4 years (Rs.2500 crore each
year)
 The government provides 80% rebate on the
patent costs & also pays the fees of the
facilitator to obtain the patent.
 Income tax exemption is available for the
startups for the first 3 years after the
incorporation.
 Relaxed Norms of Public Procurement for
Startups – 20% of MSME products / services
procured by Central , State & PSUs

Registration Benefits
 Under the Startup India scheme, an
application is there to facilitate registration.
 A single meeting is arranged to at the Start-
up India hub.
 Also, there is a single doubt and problem-
solving window for them.

government Tenders
 GovernmentTenders- High Payment, Large
Project
 The startups get priority in getting
government tenders.
 Also, they are not required to have any prior
experience.

Huge Networking
Opportunities
 The government provides this opportunity by
conducting 2 startups fests annually (both at
domestic as well as the international level).
 Startup India scheme also provides
Intellectual Property awareness workshop.

Registration of the Startup
can be done only from
following types of companies
 Partnership Firm
 Limited Liability Partnership Firm
 Private Limited Company

Eligibility for Registration
under Startup India Scheme
 Firstly, the company to be formed must be a private limited
company or a limited liability partnership firm.
 Secondly, the firms should have obtained approval from the
Department of Industrial Policy and Promotion.
 Thirdly, it must have a recommendation letter by an incubation.
 The firm must provide innovative schemes or products.
 It should be a new firm or not older than five years.
 The total turnover of the company should be not exceeding 25
crores.
 Lastly, it should not be a result of splitting up, or reconstruction,
of a business already in existence.

Business incubator

Business incubator
 It is a company that helps new and startup
companies to develop by providing services
such as management training or office space.
 The National Business
Incubation Association (NBIA) defines
“Business incubators as a catalyst tool for
either regional or national economic
development”