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This chapter explains the vital role played by Micro, Small and Medium Enterprises (MSMEs) in the Indian economy and highlights the importance of entrepreneurship development. It covers the meaning, features and contribution of MSMEs, government support through various schemes, and the meaning, characteristics, importance and types of entrepreneurship. In this blog, these notes summarise the complete chapter from the NCERT Business Studies textbook for quick and effective revision. You can also download the free PDF version of these notes to revise anywhere, anytime.
Contents
- 1 Introduction
- 2 Micro, Small and Medium Enterprises (MSMEs)
- 3 Role and Importance of MSMEs
- 4 Problems Faced by MSMEs
- 5 Government Assistance to MSMEs
- 6 Entrepreneurship
- 7 Characteristics of Entrepreneurship
- 8 Importance of Entrepreneurship
- 9 Types of Entrepreneurs
- 10 Entrepreneurship Development Programmes (EDPs)
- 11 Important Definitions in NCERT Notes Class 11 Business Studies Chapter 9: MSME and Business Entrepreneurship
- 12 FAQs
Explore Notes of Class 11: Business Studies
Introduction
Small businesses form the backbone of the Indian economy. They generate large-scale employment, promote balanced regional development, and contribute significantly to exports and GDP. The Government of India has given special attention to Micro, Small and Medium Enterprises (MSMEs) and encourages entrepreneurship to achieve inclusive and faster growth.
Micro, Small and Medium Enterprises (MSMEs)
MSMEs are enterprises classified based on investment in plant and machinery (for manufacturing) or equipment (for service sector enterprises) as per the MSME Development Act, 2006. Classification of MSMEs (as updated by the Government in 2020) is as follows:
| Category | Manufacturing Enterprises | Service Enterprises |
| Micro | Investment ≤ INR 1 crore AND Turnover ≤ INR 5 crore | Investment ≤ INR 1 crore AND Turnover ≤ INR 5 crore |
| Small | Investment ≤ INR 10 crore AND Turnover ≤ INR 50 crore | Investment ≤ INR 10 crore AND Turnover ≤ INR 50 crore |
| Medium | Investment ≤ INR 50 crore AND Turnover ≤ ₹INR 250 crore | Investment ≤ INR 50 crore AND Turnover ≤ INR 250 crore |
Role and Importance of MSMEs
Here, we have mentioned the roles and importance of MSMEs to understand their contribution more effectively.
1. It provides large employment opportunities at a comparatively lower capital cost than large industries.
2. It helps in the industrialisation of rural and backward areas, reducing regional imbalances.
3. It ensures equitable distribution of national income and wealth.
4. MSMEs contribute around 30% to India’s GDP and nearly 45% to manufacturing output.
5. It accounts for about 45% of India’s total exports.
6. MSMEs promote inclusive growth and reduce poverty.
7. It acts as an ancillary unit to large industries and supports them.
Problems Faced by MSMEs
Apart from its importance and benefits it has, it also has its own challenges. Here are the problems faced by MSMEs in the business sector.
1. Shortage of funds and credit.
2. Procurement of raw materials at competitive rates is difficult.
3. Lack of modern technology and skilled labour.
4. Poor marketing skills and limited access to markets.
5. Inadequate infrastructure facilities.
6. Competition from large industries and imports.
Also Read: NCERT Class 11 Sociology Chapter 3: Understanding Social Institutions Notes (Free PDF)
Government Assistance to MSMEs
The Government provides various incentives and support measures. Look at the government assistance to MSMEs below.
1. Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE): It provides collateral-free loans up to ₹2 crore.
2. Credit Linked Capital Subsidy Scheme (CLCSS): It offers a 15% subsidy for technology upgradation.
3. ISO 9000/ISO 14001 Certification Reimbursement: It has full fee reimbursement for getting quality/environment certificates.
4. Marketing Assistance by NSIC: It helps MSMEs participate in national and international trade fairs, buyer-seller meets.
5. Priority Sector Lending: Banks are directed to give loans to MSMEs under the priority sector.
6. Prime Minister’s Employment Generation Programme (PMEGP): Subsidy up to 35% for setting up new micro enterprises.
7. Reservation Policy: Some products are reserved for exclusive manufacturing by MSMEs.
8. Startup India and Atmanirbhar Bharat Packages: Special funds, tax benefits, and easier compliance for MSMEs.
Entrepreneurship
Entrepreneurship is the process of setting up one’s own business by taking initiative, bearing risk and innovating new ideas, products or services. An entrepreneur is a person who organises the factors of production, bears risk, and introduces new ideas/products/methods.
Characteristics of Entrepreneurship
Look at the characteristics or features of entrepreneurship:
1. Systematic and purposeful activity
2. Innovation (new product, new method, new market, new source of raw material, new organisation)
3. Risk involvement (uncertainty of returns)
4. Lawful activity
5. Creation of value
6. Profit as reward
7. Requires creativity and leadership
8. Organised and planned effort
Importance of Entrepreneurship
Entrepreneurship is an important part of the business sector and offers certain benefits. Let’s understand the importance of entrepreneurship:
1. Generates employment opportunities.
2. Contributes to economic development and GDP growth.
3. Promotes balanced regional development.
4. Encourages innovation and new technology.
5. Increases exports and reduces imports.
6. Improves the standard of living by providing better goods and services.
Types of Entrepreneurs
Entrepreneurs are classified into various categories, which are mentioned below:
1. Innovative Entrepreneurs: They introduce new products, methods or markets.
2. Imitative/Adoptive Entrepreneurs: They adopt successful innovations from others.
3. Fabian Entrepreneurs: They are very cautious and follow others only when failure is certain, otherwise.
4. Drone Entrepreneurs: They resist change, stick to traditional methods, and may suffer losses.
Entrepreneurship Development Programmes (EDPs)
The Entrepreneurship Development Programme (EDP) is a specially designed programme to develop entrepreneurial motivation, knowledge, skills, and abilities among potential entrepreneurs so that they can successfully set up and run their own enterprises.
Objectives of EDPs
Let’s understand the main objectives of Entrepreneurship Development Programmes (EDPs):
1. To develop entrepreneurial motivation and create interest in business.
2. To make people aware of business opportunities available in the environment.
3. To develop the necessary knowledge about support systems (banks, government schemes, etc.).
4. To impart basic managerial skills and business knowledge.
5. To develop skills in project identification, project selection, and project report preparation.
6. To train people in marketing, finance, production, and human resource management.
7. To build confidence and remove fear of failure.
8. To provide post-training assistance and hand-holding support.
Important Definitions in NCERT Notes Class 11 Business Studies Chapter 9: MSME and Business Entrepreneurship
This section lists key terms for clarity and revision:
- Micro Enterprise: Investment ≤ INR 1 crore and turnover ≤ INR 5 crore.
- Small Enterprise: Investment ≤ INR 10 crore and turnover ≤ INR 50 crore.
- Medium Enterprise: Investment ≤ INR 50 crore and turnover ≤ INR 250 crore.
- Entrepreneurship: Process of designing, launching and running a new business with innovation and risk.
- Entrepreneur: A person who organises, manages and assumes the risk of a business.
- MSMED Act, 2006: The Act that governs the classification and development of MSMEs in India.
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FAQs
They provide employment to millions, promote balanced regional growth, contribute to GDP and exports, and support inclusive development.
It is now based on both investment in plant & machinery/equipment and annual turnover (2020 revision).
Finance, raw material, technology, marketing, and infrastructure.
Innovative entrepreneurs create new ideas and products, while imitative entrepreneurs adopt and improve existing successful innovations.
To develop entrepreneurial motivation and skills and to create successful entrepreneurs.
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