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The Micro, Small and Medium Enterprises (MSMEs) have been playing a predominant role in the socioeconomic development of the country. Their high priority is due to their employment-generating potential, low capital requirement, short gestation period, utilization of local resources, and promotion of balanced regional development. MSME sector is considered as a growth engine that prompts development process. Especially, microenterprises allow the marginalized and vulnerable sections of the people, women and the landless to generate income, to acquire entrepreneurial ability and to obtain economic independence. Economic independence is an effective tool to break the vicious circle of poverty. Thus, microenterprises are the nursery for the development of entrepreneurial talent and have been accepted as a key to sustainable economic growth.
However, in any society, the weaker needs to be protected against the stronger ones. MSMEs are considered to be less privileged than the big corporate, and therefore, effective policy framework and instruments are needed to protect and strengthen the MSMEs. Despite such importance, this sector suffers from a variety of problems. An examination of the recent data provided in the context of the India MSME Darshan 2011, an MSME communication initiative of the Institute of Small Enterprises and Development, Cochin, suggests sickness among MSMEs has come down. On the other hand, the business birth rates have remained largely stagnated. In other words, business start-ups getting stagnated implies that there is not much incentives to invest in new ventures.
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