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Definition: SME Small and Medium Scale Enterprises
SME stands for Small and Medium Scale Enterprises. SMEs are those companies whose personal numbers falls below the set criteria. Generally this term is used by European countries and some international organizations such as WTO, World Bank and by United Nations.
SME’s are the backbone of industrial development. They play an important role in the economy of both developed and developing countries.
Criteria for SME:
Micro Companies: Up to 10 employees/ workers
Small Scale Companies: Up to 50 employees/ workers
Medium Scale Companies: Up to 250 employees/ workers
Definition of SME:
a. In manufacturing Industry:
• Micro Companies: Have investment up to Rs. 25 Lakhs
• Small Scale Companies: Have investment more than Rs. 25 Lakhs but less than Rs. 5 Crore
• Medium Scale Companies: Have investment more than Rs. 5 Crore but less than Rs. 10 Crore
b. In Service Industry:
• Micro Companies: Have investment up to Rs. 10 Lakhs
• Small Scale Companies: Have investment more than Rs. 10 Lakhs but less than Rs. 2 Crore
• Medium Scale Companies: Have investment more than Rs. 2 Crore but less than Rs. 5 Crore
Opportunities of Growth in SME Sector:
• Less capital investment
• Extensive growth and support by government
• Project Profiles
• Ease in Raw Material Procurement
• Ease in Machinery Procurement
• Growth in demand in the domestic sector due to overall economic growth
• Have wide potential growth for export as there is much demand of Indian product
Factors Affecting SME:
• Lack of availability of adequate and timely credit
• High Cost of Credit
• Limited Access to equity capital
• Designing, packaging and displaying of product
• Inventory Problem
• Lack of Infrastructures like road, transport, power etc.
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