{"id":888,"date":"2023-11-10T01:03:39","date_gmt":"2023-11-09T19:33:39","guid":{"rendered":"https:\/\/tsboardsolutions.in\/?p=888"},"modified":"2023-11-13T14:16:26","modified_gmt":"2023-11-13T08:46:26","slug":"ts-inter-1st-year-commerce-study-material-chapter-10","status":"publish","type":"post","link":"https:\/\/tsboardsolutions.in\/ts-inter-1st-year-commerce-study-material-chapter-10\/","title":{"rendered":"TS Inter 1st Year Commerce Study Material Chapter 10 Micro, Small and Medium Enterprises (MSMEs)"},"content":{"rendered":"<p>Telangana TSBIE <a href=\"https:\/\/tsboardsolutions.in\/ts-inter-1st-year-commerce-study-material\/\">TS Inter 1st Year Commerce Study Material<\/a> 10th Lesson Micro, Small and Medium Enterprises (MSMEs) Textbook Questions and Answers.<\/p>\n<h2>TS Inter 1st Year Commerce Study Material Chapter 10 Micro, Small and Medium Enterprises (MSMEs)<\/h2>\n<p><span style=\"color: #0000ff;\">Long Answer Questions<\/span><\/p>\n<p>Question 1.<br \/>\nDefine MSMEs and explain their significance in the Indian economy.<br \/>\nAnswer:<br \/>\nDefinition:<br \/>\nMSMEs means Micro, Small, and Medium Enterprises. The Small and Medium Enterprise Development Bill, of 2005 was enacted in June 2006 as the &#8220;Micro, Small and Medium Enterprises Development Act, 2006&#8221;. As per the MSMED Act, 2006, Micro, Small, and Medium Enterprises (MSMEs) are classified into two classes. They are:<\/p>\n<ul>\n<li>Manufacturing Enterprises<\/li>\n<li>Service Enterprises.<\/li>\n<\/ul>\n<p>1) Manufacturing Enterprises: Manufacturing enterprises are those enterprises that are engaged in the manufacturing or production of goods. These enterprises are involved in converting raw material into finished products by using plants and machinery.<\/p>\n<p>As per MSMEDs Act 2006, manufacturing enterprises are classified into micro, small and medium enterprises, and those are defined on the base of investment made in plant and machinery.<\/p>\n<ul>\n<li>A micro enterprise is an enterprise where investment in plant and machinery does not exceed. \u20b9 25 lakhs.<\/li>\n<li>A small enterprise is an enterprise where the investment in plant and machinery is more than \u20b9 25 lakhs but does not exceed \u20b9 5 crores.<\/li>\n<li>A medium enterprise is an enterprise where investment in plant and machinery is more than \u20b9 5 crores but does not exceed \u20b9 10 crores.<\/li>\n<\/ul>\n<p>2) Service Enterprises: The enterprises involved in providing or rendering of services are known as Service enterprises. As per MSMEDs act 2006, Service enterprises are divided into micro, small and medium enterprises and there are defined as below.<\/p>\n<ul>\n<li>A micro enterprise is an enterprise where the investment in equipment does not ex\u00acceed \u20b9 10 Lakhs.<\/li>\n<li>A small enterprise is an enterprise where the investment in equipment is more than \u20b9 10 lakhs but does not exceeds \u20b9 2 crores.<\/li>\n<li>A medium enterprise is an enterprise where the investment in equipment is more than \u20b9 2 crores but does not exceed \u20b9 5 crores.<\/li>\n<\/ul>\n<p>Significance of MSMEs:<br \/>\nMicro, Small and Medium Enterprises are integral part of the economy world wide it is accepted that Micro, Small and Medium Enterprises (MSMEs) are engine of economic growth and for promoting economic development.<\/p>\n<p>In India, the MSMEs play an important role in the overall industrial economy of the country. They are widely dispersed across the country and produce a diverse range of products and services to meet the needs of local market and also global market. The significance of MSMEs is given below.<\/p>\n<ul>\n<li>MSME contributes 45% of India&#8217;s produced output.<\/li>\n<li>MSME contributes approximately 40% of India&#8217;s exports.<\/li>\n<li>MSMEs are contributing 8% of the country&#8217;s GDP.<\/li>\n<li>MSMEs gives employment to 73 million people in more than 31 million units spread across the nation [40% of the employment opportunity in India is provided by MSME Sector].<\/li>\n<li>90% of MSMEs in India are unregistered (out of which nearly 80% are sole proprietor Firms].<\/li>\n<li>MSMEs provide opportunities to the small entrepreneurs by providing various channels of Investment opportunity according to their class of investment.<\/li>\n<li>MSMEs provide a good market for foreign companies to start venture capital business in India.<\/li>\n<li>MSMEs manufactures more than 6,000 products arraying from hi-tech to traditional industries.<\/li>\n<\/ul>\n<p>Question 2.<br \/>\nExplain the problems faced by Indian MSME sector in detail.<br \/>\nAnswer:<br \/>\nThe Indian MSMEs are facing different types of problems.<\/p>\n<p>Various problems faced by Indian MSMEs are given below:<br \/>\n1) Lack of Credit from Banks: The MSMEs are facing the problems of non availability of credit from banks. The banks are not providing the adequate amount of loan to the MSMEs. The promotors of the MSMEs have to produce different types of documents to prove their worthiness. The loan providing process of the banks is very time consuming.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/tsboardsolutions.in\/wp-content\/uploads\/2022\/12\/TS-Board-Solutions.png\" alt=\"TS Inter 1st Year Commerce Study Material Chapter 10 Micro, Small and Medium Enterprises (MSMEs)\" width=\"161\" height=\"15\" \/><\/p>\n<p>2) Competition from Multinational Companies: Due to globalization, the MSMEs are facing the tough competition from the multinational companies who are providing quality goods at cheapest prices. Therefore, it is very difficult for MSMEs to compete with the multinational companies.<\/p>\n<p>3) Poor Infrastructure: MSMEs are developing so rapidly but their infrastructure is very poor. With poor infrastructure, their production capacity is very low while production cost is very high.<\/p>\n<p>4) Non Availability of Raw Material and Other Inputs: For establishment of MSMEs required raw material, skilled work labour and other inputs which are not available in the market. Due to unavailability of these essentials, it is very difficult to produce the products at affordable prices.<\/p>\n<p>5) Lack of Advanced Technology: The owners of MSMEs are not aware of advanced technologies of production. Their methodology of production is outdated.<\/p>\n<p>6) Lack of Distribution of Marketing Channels: The MSMEs are not adopting the innovative channels of distribution. Their advertisement and sales promotion strategies are comparatively weaker than the multinational companies. Thus, they get low profits.<\/p>\n<p>7) Lack of Training and Skill Development Program: The proprietors of MSMEs are not aware of the innovative methods of production. Lack of proper training and skill enhancement programs in respect of MSMEs are very low. The skill development pro-grams organised by the state and central governments are not reaching properly to all the units across the country.<\/p>\n<p>Question 3.<br \/>\nDiscuss the privileges offered to MSMEs in India.<br \/>\nAnswer:<br \/>\nMSMEs are enjoying specific privileges and advantages when compared to other enter-prises. The MSMED Act, provides the following privileges on micro, small and medium enterprises.<\/p>\n<p>1) Exclusive Manufacturing of Certain Products by MSMEs: The major benefit for MSMEs is the reservation policy, which reserves certain items, for exclusive manufacture by these enterprises. The Government has put in place policies and has reserved three hundred fifty (350) items for purchase from MSMEs, under the Government Stores Purchase Programme.<\/p>\n<p>2) Space Allocation: To encourage the MSMEs, the Special Economic Zones (SEZs) are required to allocate 10% space for the small-scale units.<\/p>\n<p>3) Timely Payment for Goods and Services: Under MSMED Act, protections are offered in relation to timely payment for goods and services by buyers to MSMEs. It lays an obligation upon the buyers of any goods or services of MSMEs to make payment on specified date as per the agreement.<\/p>\n<p>4) Strong Support and Encouragement from the Government: The Government has been encouraging and supporting this sector by offering packages of schemes and incentives through its specialized institutions in the form of assistance in obtaining finance, help in marketing, technical guidance, training and technology upgradation etc.<\/p>\n<p>5) Interest for Delayed Payment by the Buyer: When a buyer fails to make payment as required by the seller, he shall be liable to pay interest on the outstanding amount, for the period of delay from the date immediately following the agreed date. The interest shall be payable at a rate three times the bank rate and compounded at monthly rates.<\/p>\n<p>6) Reference of Disputes: If there are any disputes relating to amount payable for any goods or services, and any interest thereon, may be referred by any party, to the Micro and Small Enterprises Facilitation Council, which shall conduct conciliation in the matter.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/tsboardsolutions.in\/wp-content\/uploads\/2022\/12\/TS-Board-Solutions.png\" alt=\"TS Inter 1st Year Commerce Study Material Chapter 10 Micro, Small and Medium Enterprises (MSMEs)\" width=\"161\" height=\"15\" \/><\/p>\n<p><span style=\"color: #0000ff;\">Short Answer Questions<\/span><\/p>\n<p>Question 1.<br \/>\nDefine manufacturing enterprises as per MSMEs Act, 2006.<br \/>\nAnswer:<br \/>\nManufacturing enterprises are those business enterprises which are engaged in the manufacturing or production of goods or commodities. Manufacturing enterprises involve in converting the raw materials into finished products.<\/p>\n<p>As per MSMED Act 2006, the manufacturing enterprises are categorised into micro, small and medium enterprises and these are defined in terms of investment made in plant and machinery as shown below.<\/p>\n<ul>\n<li>A micro enterprise is an enterprise where investment in plant and machinery does not exceed \u20b9 25 lakhs.<\/li>\n<li>A small enterprise is an enterprise where the investment in plant and machinery is more than \u20b9 25 lakhs but does not exceed \u20b9 5 crores.<\/li>\n<li>A medium enterprise is an enterprise where the investment in plant and machinery is more than \u20b9 5 crores but does not exceed \u20b9 10 crores.<\/li>\n<\/ul>\n<p>Question 2.<br \/>\nDefine Service enterprises as per MSMEs Act, 2006.<br \/>\nAnswer:<br \/>\nThe enterprises which involved in providing or rendering of services are known as service enterprises.<\/p>\n<p>As per MSMED Act 2006, Service enterprises are divided into micro, small and medium enterprises on the base of investment made in equipment. These service enterprises are defined as below:<\/p>\n<ul>\n<li>A micro enterprise is an enterprise where the investment in equipment does not exceed \u20b9 10 lakhs.<\/li>\n<li>A small enterprise is an enterprise where the investment in equipment is more than 110 lakhs but does not exceed \u20b9 2 crores.<\/li>\n<li>A medium enterprise is an enterprise where the investment in equipment is more than \u20b9 2 crores but does not exceed \u20b9 5 crores.<\/li>\n<\/ul>\n<p>Question 3.<br \/>\nBriefly explain the registration process of MSMEs.<br \/>\nAnswer:<br \/>\nThe Ministry of MSME has been undertaking number of programs to help and assist entrepreneurs and small business. Entrepreneurs who are planning to setup business, may contact National Institute for Micro, Small and Medium Enterprises, or Indian Institute of Entrepreneurship or the Development Commissioner for details about their programs and business plans.<\/p>\n<p>The following are the requirements for registration process of MSMEs under MSMED Act, 2006.<\/p>\n<ul>\n<li>Any person intending to establish a micro or small enterprise may do at his discretion.<\/li>\n<li>Any person intending to establish a medium enterprise engaged in providing or rendering of services may at his discretion.<\/li>\n<li>Any person intending to establish a medium enterprise engaged in the manufacturing or production of goods pertaining to any industry specified in the first schedule to the Industries (Development and Regulation) Act, 1951, shall file the memorandum of medium enterprise with authority specified by the state Government or the Central Government.<\/li>\n<\/ul>\n<p>Question 4.<br \/>\nExplain the promotional measures initiated for strengthening MSMEs in India.<br \/>\nAnswer:<br \/>\nThe following are the measures for promotion and development of micro, small and medium enterprises, to be undertaken by the Central Government, State Government and the Reserve Bank of India.<\/p>\n<p>These measures are explained as below:<\/p>\n<ul>\n<li>Organizing programs to facilitate development of skills among the employees, management and entrepreneurs, provisioning for technological upgradation, marketing, infrastructure facilities.<\/li>\n<li>Credit facilities are provided for timely and smooth flow of credit, minimize the incidence of sickness, and enhance the competitiveness of MSMEs.<\/li>\n<li>Preferential procurement of goods and services of MSMEs, by the Government, its aided institutions and public sector enterprises.<\/li>\n<li>Government grants to the notified fund or funds which are to be utilized exclusively for the measure of promotion and development of MSMEs.<\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/tsboardsolutions.in\/wp-content\/uploads\/2022\/12\/TS-Board-Solutions.png\" alt=\"TS Inter 1st Year Commerce Study Material Chapter 10 Micro, Small and Medium Enterprises (MSMEs)\" width=\"161\" height=\"15\" \/><\/p>\n<p><span style=\"color: #0000ff;\">Very Short Answer Questions<\/span><\/p>\n<p>Question 1.<br \/>\nMicro Enterprise.<br \/>\nAnswer:<br \/>\ni) For Manufacturing Enterprises:<br \/>\nA micro enterprise is an enterprise where the investment in plant and machinery does not exceed \u20b9 25 lakhs,<\/p>\n<p>ii) For Service Enterprises:<br \/>\nA micro enterprise is an enterprise where the investment in equipment does not exceed \u20b9 10 lakhs.<\/p>\n<p>Question 2.<br \/>\nSmall Enterprises.<br \/>\nAnswer:<br \/>\ni) For Manufacturing Enterprises:<br \/>\nA small enterprise is an enterprise where the investment in plant and machinery is more than \u20b9 25 lakhs but does not exceed \u20b9 5 crores.<\/p>\n<p>ii) For Service Enterprises:<br \/>\nA small enterprise is an enterprise where the investment in equipment is more than \u20b9 10 lakhs but does not exceed \u20b9 2 crores.<\/p>\n<p>Question 3.<br \/>\nMedium Enterprises.<br \/>\nAnswer:<br \/>\ni) For Manufacturing Enterprises:<br \/>\nA medium enterprise is an enterprise where the investment in plant and machinery is more than \u20b9 5 crores but does not exceed \u20b9 10 crores.<\/p>\n<p>ii) For Service Enterprises:<br \/>\nA medium enterprise is an enterprise where the investment in equipment is more than \u20b9 20 crores but does not exceed \u20b9 5 crores.<\/p>\n<p>Question 4.<br \/>\nManufacturing Enterprise.<br \/>\nAnswer:<br \/>\ni) The enterprise which is engaged in the manufacturing or production of goods is called a manufacturing enterprise.<br \/>\nii) There are 3 types of manufacturing enterprises on the base of investment in plant and machinery. They are given below:<\/p>\n<ul>\n<li>Micro Enterprise: Investment in plant and machinery does not exceed \u20b9 25 lakhs.<\/li>\n<li>Small Enterprise: Investment in plant and machinery is more than \u20b9 25 lakhs but does not exceed \u20b9 5 crores.<\/li>\n<li>Medium Enterprise: Investment in plant and machinery is more than \u20b9 5 crores but does not exceed \u20b9 10 crores.<\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/tsboardsolutions.in\/wp-content\/uploads\/2022\/12\/TS-Board-Solutions.png\" alt=\"TS Inter 1st Year Commerce Study Material Chapter 10 Micro, Small and Medium Enterprises (MSMEs)\" width=\"161\" height=\"15\" \/><\/p>\n<p>Question 5.<br \/>\nService Enterprise.<br \/>\nAnswer:<br \/>\ni) The enterprise involved in providing or rendering services is called a service enterprise.<br \/>\nii) There are 3 types of enterprises based on investment in equipment. They are:<\/p>\n<ul>\n<li>Micro Enterprise: Investment in equipment does not exceed \u20b9 10 lakhs.<\/li>\n<li>Small Enterprise: Investment in equipment is more than \u20b9 10 lakhs but does not exceed \u20b9 2 crores.<\/li>\n<li>Medium Enterprise: Investment in equipment is more than Rs. 2 crores but does not exceed \u20b9 5 crores.<\/li>\n<\/ul>\n<p>Question 6.<br \/>\nDefine Enterprise.<br \/>\nAnswer:<br \/>\n1) The term &#8220;Enterprise&#8221; is defined under section 2(e) as &#8220;any industrial understanding or business concern or any other establishment, engaged in the manufacture or production of goods, in any manner pertaining to any industry specified in the first schedule to the Industries (Development and Regulation) Act, 1951, or engaged or providing or rendering of any service or services.<\/p>\n<p>2) The term &#8220;Enterprise&#8221; includes: Proprietorship, Hindu Undivided Family, Co-operative Society, Partnership Undertaking, or any other legal entity.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Telangana TSBIE TS Inter 1st Year Commerce Study Material 10th Lesson Micro, Small and Medium Enterprises (MSMEs) Textbook Questions and Answers. TS Inter 1st Year Commerce Study Material Chapter 10 Micro, Small and Medium Enterprises (MSMEs) Long Answer Questions Question 1. Define MSMEs and explain their significance in the Indian economy. Answer: Definition: MSMEs means &#8230; <a title=\"TS Inter 1st Year Commerce Study Material Chapter 10 Micro, Small and Medium Enterprises (MSMEs)\" class=\"read-more\" href=\"https:\/\/tsboardsolutions.in\/ts-inter-1st-year-commerce-study-material-chapter-10\/\" aria-label=\"More on TS Inter 1st Year Commerce Study Material Chapter 10 Micro, Small and Medium Enterprises (MSMEs)\">Read more<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/tsboardsolutions.in\/wp-json\/wp\/v2\/posts\/888"}],"collection":[{"href":"https:\/\/tsboardsolutions.in\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tsboardsolutions.in\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/tsboardsolutions.in\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/tsboardsolutions.in\/wp-json\/wp\/v2\/comments?post=888"}],"version-history":[{"count":5,"href":"https:\/\/tsboardsolutions.in\/wp-json\/wp\/v2\/posts\/888\/revisions"}],"predecessor-version":[{"id":2556,"href":"https:\/\/tsboardsolutions.in\/wp-json\/wp\/v2\/posts\/888\/revisions\/2556"}],"wp:attachment":[{"href":"https:\/\/tsboardsolutions.in\/wp-json\/wp\/v2\/media?parent=888"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tsboardsolutions.in\/wp-json\/wp\/v2\/categories?post=888"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tsboardsolutions.in\/wp-json\/wp\/v2\/tags?post=888"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}