Role of Micro, Small and Medium Enterprises

1. Provide Employment: Being labour-intensive, MSMEs provide additional employment to men and women. After agriculture, MSMEs constitute the most employed people in India. The farmers and other landless labours who remain unemployed or idle during a part of the year have also been provided with employment in any micro, small or medium business around them.

2. Variety of Products: MSMEs offer a variety of products to the consumers, such as mass consumption goods, stationery, readymade garments, plastic and rubber goods, soaps and detergents, etc. 

3. Improves Economic Condition: MSMEs are established mainly in rural and semi-urban areas, which generally belong to the economically poor section of society. The establishment of industries around these sections leads to improvement in employment, which helps in improving the overall economic condition.

4. Low Cost of Production: Generally, MSMEs produce simple products with the help of simple technology and take local resources, both labour and material, into consideration, which helps them to maintain a low cost of production.

5. Promotion of Artistic and Creative Sense: Businesses set up in rural area promotes the artistic and creative sense of rural people, which has been suppressed for all these years. The use of natural products and the rural sense of using those products are promoted by MSMEs.

6. Rural Development: Establishment of industries around economically weaker sections leads to improvement in infrastructure, health facilities, safe drinking water, etc. It also results in sustained growth and regional disparity.

7. Mobilisation of Local Resources: Local resources can remain unutilized if the number of industries and businesses around them is low. MSMEs help in the mobilization of local resources, like entrepreneurship skills or small savings or even some natural resources around rural areas.

The size of a business in small industries and business establishments is a major issue. Several parameters can be used to measure the size of business units. These include the number of people employed in a business, capital invested in a business, the volume of output or value of the output of a business, and power consumed for business activities. The definition used by the Government of India to describe MSME is based on investment in plants and machinery. 

The definition and classification of MSME are as per the MSMED (Micro, Small, and Medium Enterprises Development) Act of 2006, (Revised Classification applicable w.e.f 1st July 2020):