MSMEs (Micro, Small and Medium Enterprises) Segmentation in India: Towards Need Based Financing
MSMEs (Micro, Small and Medium Enterprises) is one of the sectors in India that not only contributes significantly to economic growth but also its contribution is more than the overall GDP growth rate. This sector is thought to be one but actually it is not homogeneous in itself. Apart from operations, MSME sector as a whole is facing a major problem related to financing of its enterprises. When analyzed closely, it is found that funding needs of Micro Enterprises, Small Enterprises and Medium Enterprises are different from each other and therefore the quantum and frequency of fund requirements vary from enterprise to enterprise. This paper depicts the differences that exist in the financing needs of Micro, Small and Medium enterprises in India. As financing problems are different within the sector, it should be dealt differently and different strategies should be adopted to meet their financing needs accordingly. This paper has been prepared on the basis of literatures available in various MSMEs annual reports, journals and articles. The present research paper reveals that as there are considerable differences in the financing needs of different segments of the MSME sector and there is a need to redefine the sector again.