Micro, Small, and Medium Enterprises (MSMEs) play a crucial role in our country’s economic system. They have created a host of employment opportunities and driven strategies towards innovation.
 

MSMEs differ in scope, size, investment, and annual turnover, possessing unique characteristics. Here is a detail about the difference between Micro, Small, and Medium Enterprises and their importance in India.

What are Micro, Small, and Medium Enterprises?

Micro, Small, And Medium Enterprises (abbreviated as MSMEs) are organisations that process, produce, and preserve products. They create employment opportunities and contribute towards developing our country's remote regions — significantly contributing to our country’s socioeconomic growth. 
 

MSMEs are classified according to nature, scale, financial investment in plant and machinery, or turnover. Based on the size, micro-enterprises are the smallest, followed by small and medium enterprises.
 

Micro Enterprises

Micro enterprises are the smallest in scale and are characterised by minimal workforce and capital investment.
 

Examples:

• Street vendors

• Local bakery shops

• Independent carpentry services

• Independent shoemakers

Small Enterprises

Small enterprises are slightly bigger in scale and resources deployed. They have more significant investment and a larger workforce. 
 

Examples:

Small-scale manufacturing companies that produce:

• Candles

• Chocolate

• Stationery items

Medium Enterprises

Medium enterprises are comparatively larger businesses. However, they are not as extensive as large corporations. They have a larger workforce and a higher annual turnover. 
 

Examples:

• Manufacturers

• Wholesalers

• Recruitment service providers

Difference between Micro, Small, and Medium Enterprises

The primary difference is based on the financial threshold, and it varies according to the standards and regulations of different countries. 
 

In India, the investment made in plant and machinery and annual turnover is the basis for the financial thresholds. 
 

Here is a table detailing the difference between Micro, Small, and Medium Enterprises.
 

Categories	Investment	Turnover
Micro Enterprises	Investments of up to ₹1 crore	Turnover of less than ₹5 crores
Small Enterprises	Investments of up to ₹10 crores	Turnover of less than ₹50 crores
Medium Enterprises	Investments of up to ₹50 crores	Turnover of less than ₹250 crores

 

Difference between MSME and SME

Often people get confused between MSMEs and SMEs in India. While Small and Medium Enterprises (SMEs) have been used more in India, it is a fundamental notion, and its actual meaning is MSME.
 

Since the MSME sector has been a significant contributor to the Indian economy, the government has been trying to encourage the citizens in its favour.

 

Government Initiatives

The Ministry of Micro, Small, and Medium Enterprises in India has taken several initiatives to ensure the growth and development of MSMEs in India. 
 

Policy Formulation

The Ministry develops policies encouraging the growth of Micro, Small, and Medium Enterprises in India, such as subsidies, tax benefits, incentives, etc. In addition to formulation, the Ministry ensures that these policy benefits are communicated to the people concerned to maximise the benefits. 
 

Promotion of MSMEs

The Ministry has introduced several schemes and programmes to encourage the stakeholders to enhance their knowledge and collaborations for business development. 
 

Example

Entrepreneurship and Skill Development Programme (ESDP)

Various activities for the ESDP are organised regularly to nurture young individuals and engage them in many aspects of business or industrial activities required for establishing Micro, Small, and Medium Enterprises in India. 
 

Some of the activities conducted under the ESDP are:

• Entrepreneurship Awareness Programme

• Industrial Motivational Campaign

• Management Development Programme

• Entrepreneurship-cum-Skill Development Programme
   

Financial Assistance and Infrastructure Development

The Ministry provides financial assistance by increasing access to credit facilities by coordinating with financial institutions for loans, credit guarantees, etc. Furthermore, they set up shared facilities and industrial parks with utilities at an affordable rate. 
 

Technology Upgradation

The Ministry of MSME promotes competitiveness by implementing schemes to support Design Improvement, wastage reduction through Lean Manufacturing, building awareness of Intellectual Property Rights, Digital Empowerment, etc.

 

Why is Life Insurance Important for People Engaged in MSMEs?

• Financial security - People engaged in MSMEs may not have a regular source of income, considering the limited scale and marketing facilities. They might keep engaging in different activities to satisfy family commitments. Therefore, a life insurance policy is essential to securing their family’s financial future. 

• Savings and investment benefits - Life insurance plans also offer savings and investment benefits in addition to life cover. For instance, the savings insurance plan offers a guaranteed1 return, and the Unit Linked Insurance Plan (ULIP2 Plan) offers market-linked3 returns as a maturity benefit. 
   

  Our Tata AIA life insurance plans are customisable and can be tailor-made to suit individual financial needs. Therefore, people engaged in MSMEs can secure funds for their future family financial goals based on their requirements. 

• Clear-off debt obligations - While people engaged in MSMEs establish their businesses going through different financial challenges, clearing off debts can be difficult over the long term. A life insurance policy with endowment or maturity benefits can help in clearing-off debts and reduce the burden for their family in their absence.

Conclusion

The diverse scope and business prospects of Micro, Small, and Medium Enterprises have played a significant role in India’s economic and social development. MSMEs differ in size, investment, and annual turnover. They have significantly contributed to India’s GDP over the years, and therefore, Government initiatives have nurtured and empowered MSMEs to encourage entrepreneurial development.