MSME stands for Micro, Small, and Medium Enterprises. The Micro, Small, and Medium Enterprises Development (MSMED) Act, which was passed in 2006, divides businesses into two groups: 1) Manufacturing enterprises – engaged in the manufacturing or production of goods in any industry, and 2) Service enterprises – engaged in providing or rendering services. MSMEs have played an essential role in providing employment opportunities in underprivileged areas.
They have helped in the industrialization of such areas with a low capital cost compared to the larger industries in cities. MSMEs have also contributed and played an essential role in the country’s development in different areas like the requirement of low investment, flexibility in operations, low rate of imports, and a high contribution to domestic production.