Institute of Small Enterprises and Development

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MSMEs in India: A Regional Audit

A unique feature of India’s micro , small and medium enterprises is their regional diversity. This, unlike in many other countries, is a reflection of the geographical and cultural diversity of the country. Such diversity is, alternatively, a significant latent opportunity, which probably, is paralleled by China alone. It also offers significant market opportunities for these enterprises. However, policies of the State governments, so far, have tried to follow a national pattern, rather than to grab the local opportunities. The perspective brought in by NITI Aayog paves the way for an alternative line of thinking. A true spirit of cooperative federalism can help to strengthen the national economy, as also the economies of the States. However, the State governments need to evolve region- specific strategies, rather than try to copy national level models and strategies relating to MSME development.

ISED-226 done

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ISED Diagnosis: ‘Bypass Model’ of Kerala Development

The sustainable development of  countries and regions that depend essentially on foreign remittances has been a subject of academic debates. It has been argued that , depending extensively on the  services sector, and of external remittances, can as well be a model in itself, which Kerala can safely pursue. While the above perception has been increasingly questioned, there have not been much alternative offerings.

The Kerala Enterprise Development Report analyses such experience, as a ‘Bypass Model’, which is an unsustainable model as well. It is like a bypass surgery in the human body. In a coronary bypass surgery, once the patient has recovered, the symptoms of angina will be gone or much better. You’ll be able to be more active, and you’ll have a lower risk of getting a heart attack. But the post-operation risks are, fever, heart attack, infection and bleeding at the incision, memory loss, pain, reactions to anaesthesia, and stroke.

Policy prescriptions for a way out from Kerala’s development crisis ,so far, have focused on  an ‘investment approach’. The Report argues for  a strategic approach, with ‘Inclusive Enterpreneurship Development’ as its focal point. The ‘Inclusive entrepreneurship Development Model’ of ISED is grounded on an adaptation of the ‘Triple Bottom-line Principle’ to the context of enterprise development.

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GST: Implications for Small Enterprises


The introduction of the Goods and Services Tax (GST) in India, with effect from July 1, 2017,is likely to contribute to a paradigm shift in the prospects of small enterprises. While on the one hand, the tax regime is likely to get simplified for these enterprises, considering the geographical spread of such enterprises, the distributional implications also are likely to be substantial.

Both the advocacy platforms and the Business Development Service providers in India have traditionally focused on dealing with tax problems of MSMEs. The introduction of a national tax structure under  the GST, is likely to  simplify the  system to the benefit of the entrepreneurs. The  ISED research Team working on the forthcoming volume of India Micro, Small and Medium Enterprise Report 2017,will come out with its findings shortly.

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Gender Credit Delivery and Credit Absorption

Targeted credit delivery is a thorny issue around the world. Legislation and creation of institutional structures can contribute significantly to providing the ecosystem. However, the actual flow of credit to the targeted social categories, depends on the absorptive capacity of these social categories and their enterprises. While absorptive capacity of women enterprises depends on their viability and vibrancy, it is also important that, from an angle of gender sensitivity, the other stake holders should play a supportive role to creating and enhancing such absorptive capacity. It is important to discuss this rather difficult subject ,on the basis of the evidences available from the field.

ISED-239 done

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MSME Social Responsibility in India: Changing Perspectives

Responsible business practices have gained an unprecedented role and relevance in modern business. For the planners and the policy makers, it gives an opportunity for a look back on the qualitative aspects of enterprise development, rather than confining on sheer numbers. ‘Responsible business’, as an essentially global concept, need to gain stronger and deeper attention in India for a variety of reasons. It provides an opportunity for having a closer look at the way business is done, as also opportunities and constraints attached to global value chains. While the role of the individual firm in this regard may be limited, at the cluster level, the potential is much greater. However, following the announcement of the ‘National Voluntary Guidelines’, much has not happened on the practical side in order to nurture a culture of ‘responsible business’ among MSMEs in the country. There is the imperative for developing a practical approach, which will enable the Indian MSMEs to perform better in the global value chains.