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The Problems and Solutions of MSME


Sanat Sankrityayan 2016-06-10


Micro, small and medium size enterprises or MSMEs contribute substantially to the growth of national economy. MSME`S contribution towards, investment, employment generation, GDP, production etc., in every area is significant. They utilize resources effectively, generate employment, they have greater operational flexibility, mobility and higher innovations in less investment. MSMEs contribute to almost 45% of GDP in India. As such they cannot be ignored or neglected. These MSMEs however face a number of unique problems that prevent them from developing further and create limiting factors that affect them negatively.

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Problems of MSMEs

  • MSMEs are small units with limited resources. Hence, globalization is an opportunity for them, yet, at the same time it is also a challenge.
  • Banks are reluctant to give loans to MSMEs. They compel small industries to produce a large number of documents and loan processing is a lengthy and troublesome procedure. Since they have no working capital, they cannot think of expansion and sometimes even find it difficult to survive.
  • Multi-national giant companies invest a lot of money in manufacturing goods that are suitable for small scale industries. As a result, the big companies can afford to sell the same products at much cheaper rates. MSMEs are not in a position to compete with the big giants.
  • Since the companies were established with limited means, the infrastructure is limited. The infrastructure was not erected with tremendous expansion in view. Hence, the small industries tend to remain small or medium and cannot grow in the available infrastructure.
  • MSMEs cannot afford advanced technology which proves to be a major hurdle in the path of progress.
  • All the laws related to the all aspects of manufacturing and service concern are very complex and compliance with these laws are practically difficult .The various decisions of factory’ are depend upon the factory commissioner and inspector, so there are so many chances of red tape in the operation of MSME’S.

The fact that there are many problems faced by MSMEs does not mean that there are no solutions. Most of the problems can be dealt with in some way or the other. Here are some suggested solutions to the problems of MSMEs.

  • Industries in the same sector can spend little amounts on developing some part of technology. If each industry focuses on a single aspect of technology, all industries can share their knowledge.
  • MSMEs can work on collaborative basis and help each other.
  • One expert from each company can be a member of a team of experts and the team can work as consultant for all MSMEs, helping them to solve their problems and giving advice and guidance.
  • Small companies can pool resources and devote them for research purpose and also for training programmes.
  • Banks must be more considerate and provide loans without hassles.
  • The government should relax laws and regulations so that MSMEs will be motivated to work with vigour and grow and expand.

VEDZEN is an organization that provides complete support and guidance to MSMEs with an aim to bring them at par with international growth standards by implementing strategies that are proven to succeed in larger companies. At VEDZEN, we do not merely train the employees but play a major role in changing their mind-set and preparing them to meet global challenges.


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