Performance of micro, small and medium enterprises in India: Before and after the MSMED Act, 2006
The MSMEs have long been recognized as the ‘engine of growth’ by providing large scale employment with smaller capital investment. In India it is the second largest employment generating sector after agriculture. As ancillary units, they complement the industrial sector and contribute significantly in the inclusive industrial development of India. Globalization has facilitated the opening of local and nationalistic perspectives to a broader interdependent world with free movement of capital goods and services. The MSMED act of 2006 has brought about some policy changes with the broader objective of economic and social development by flourishing entrepreneurship. The present study aims at to understand the performance of the MSMEs in the post liberalization period along with the effect of introducing the MSMED Act of 2006. The concept of efficiency has been introduced as a measure of the performance of this sector. It is found that after the introduction of new act the efficiency of the firms has improved to a great extent. This indicates a positive side of the new act. Besides, there exists evidence of the improvement of the export quality after the introduction of new act in 2006.