NCEUS Report on the State of the Indian Micro and Small Enterprises (MSEs)

The National Commission for Enterprises in the Unorganised Sector (NCEUS) made a report on the status of the Indian Micro and Small Enterprises (MSEs). There were about 44.1 million non-farm unorganized enterprises in 1999-2000 according to the NSS 55th Round report. However, in 2005, 41.83 million enterprises were found to come under NCEUS’ definition of informal/ unorganized enterprises.

Traditional activities were involved by most of the micro-enterprises including 6.5 million enterprises in handloom sector and 0.5 million in Khadi and village industries sector. Agro-processing activities such as dairy, fishery, poultry and others were involved by about 8.2 million enterprises. The remaining 19.3 million of them were involved in cover handicrafts, coir, sericulture, wool, small business, retail trade and others.

Subcontracting is also observed among the large and small firms in India. There was increase in subcontracting to 32 percent in 2005-06 from 31 percent in 2000-01. Subcontracting was observed in 27.3 percent of rural and 31.5 percent of urban enterprises. The incidence of subcontracting was found to be 54% in West Bengal, 52% in Tamil Nadu, 39% in Karnataka, 35% in UP and 27% in Kerala (27%). Less than 10 percent of enterprises were subcontracted at Himachal Pradesh, Haryana and Madhya Pradesh.

MSE sector is also prevalent in urban areas. In service sector, about 47 percent of the total MSEs were urban enterprises. Most of the enterprises were seen in West Bengal, Bihar, Uttar Pradesh and Orissa.

According to the report, there were 17 million enterprises in manufacturing sector in 2005-06. Around 71% of them were from rural areas. Around 32 million people were employed by the manufacturing sector of MSEs in 2005-06. Rural domination was observed from these data. However, a share of about 34% of the workforce was seen from urban informal sector.