How Many Small and Medium Businesses are there in India (2020)?

How Many Small and Medium Businesses are there in India (2020)?

Micro, Small and Medium Enterprises(MSMEs) play a vital role in the growth of any country. This is especially true in the case of a developing country like India where agriculture is the main source of employment.

MSMEs are an important source of large employments with low capital costs. They provide more employment than all large industries combined. They help in industrializing rural and urban centers and reducing regional imbalances in development.

In this article, let’s see how many small businesses are there in India and their types. Moreover, let’s look at the distinction between Micro, Small and Medium businesses.

Before we start, let me clarify that Small Scale Industries(SSIs) and MSMEs are one and the same. Indian government passed the Micro Small and Medium Enterprise Development Act in 2006 to develop small scale industries in India.

In India, as of the year 2020, there are 633.88 lakhs (or 63.3 million) of businesses. Of those 630.52 lakhs(i.e., 99% ) are Micro-businesses. Only 3.31 lakhs are Small and the rest 0.05 lakhs are Medium businesses.

The numbers provided in this article are as per the latest National Sample Survey, conducted by the National Sample Survey Office, Ministry of Statistics & Programme Implementation during 2015-2016.

Of all the businesses (enterprises), 196.65 lakhs( or 19.6 million) are manufacturing businesses, 230.35 lakhs(23.03 million) are in trade and 206.85 lakhs( or 20.685 million) in other services.


Category
Number of Enterprises( lakhs) Percentage (%)
Total 324.88 309.00 633.88 100
Rural Urban Total
Manufacturing 114.14 82.50
196..65 31
Trade 108.71 121.64 230.35 36
Others 102.00 104.85 206.85 33
Electricity 0.03 0.01 0.03 0

Types of businesses/ SSIs in India

Businesses are divided into Micro, small and medium based on their initial investments. The threshold is different based on the type of business, whether a manufacturing-based or service-based. Here, initial investment doesn’t include the cost of land, building, furniture & fitting.

If you own a manufacturing business, then your business is categorized based on the table below.

Manufacturing Businesses
Business categoryCost of Investment (land & Building cost not included)
Micro< Rs.25 lakhs
SmallRs.25 lakhs to 5 Crores
MediumRs. 5 Crores to 10 Crores

If you own a service-related or simply trading business, then your business is categorized as per the table below.

Service and trade Businesses
Business CategoryCost of Investment (Land, Building, Furniture & Fitting Not included)
Micro< Rs. 10 lakhs
SmallRs. 10 lakhs to 2 crores
MediumRs.2 Crores to 5 crores

Micro businesses are the backbone of the Indian Economy. This is proven by the that, of the existing MSMEs, 630.52 lakhs(i.e., 99% ) are Micro-businesses. Only 3.31 lakhs are Small and the rest 0.05 lakhs are Medium businesses.

MicroSmallMediumTotal
Enterprises630.523.310.05633.88

SSIs in Rural/ Urban India

Analyzing the distribution of businesses in rural and urban areas can give us key insights. It can be very helpful in understanding income equality and decentralized development.

So, let’s further divide businesses according to their location. 51% of the total number of businesses in India are located in rural areas and 49% in urban areas. This shows that development in India is not just concentrated around cities but decentralized.

The distribution of micro, small and medium businesses in rural and urban areas are given in the table below. All the numbers mentioned are in lakhs.

AreaMicroSmallMediumTotalPercentage(%)
Rural324.090.780.01324.8851
Urban306.432.530.04309.0049
All630.523.310.05633.88100

Businesses owned by Male/Females

There are 608.41 lakhs of proprietary enterprises( or single owner) in India. There is an overwhelming majority of male owners in proprietary MSMEs.

Gender wise percentage distribution of businesses(enterprises) in urban and rural areas are given in the table below.

SectorMale(%)Female(%)
Rural77.7622.24
Urban81.5818.42
All79.6320.37

We can observe, women own a little higher percentage of shops in rural areas compared to urban areas.

The percentage distribution of enterprises by male/female ownerships are given in the table below.

CategoryMale(%)Female(%)
Micro79.5620.44
Small94.745.26
Medium97.332.67
All79.6320.37

This above table shows income inequality between men and women. Females are of significant proportion only in the Microbusiness sector.

Sandarsh Naroju

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