The one sector which provides a major contribution for the backbone of an economy is Micro, Small and Medium Enterprises (MSME) in establish an considerable growth rate and consistently providing job opportunities. In many developed and developing countries considers this sectors as the engine of economic growth and community development. part of MSMEs to the Indian economy in terms of employment generation, containing regional disparities, fostering equitable economic growth and pleasing to the eye export potential of the country has been quite phenomenal. Despite some infrastructural deficiency and challenges like flow of institutional credit and inadequate market linkages, this sector has register remarkable success with regard to increase in number, quantum of investment, scale of production and overall role to national GDP.
Micro, small and medium enterprises (MSMEs) in India and abroad have demonstrated considerable strength and resilience in maintaining a consistent rate of growth and employment creation during the global recession and economic slowdown. Indian economy during the recent years has shown an significant growth performance by causal to creation of livelihood opportunity to millions of people, in enhancing the export potential and in increasing the overall economic growth of the country. Prompt and suitable fiscal stimulus, effective monetary policy and huge capital inflows were greatly active in the bounce back situation of the economy.
As a catalyst for socio-economic transfor mation of the country, the MSME sector is extremely crucial in addressing the national objectives of bridging the rural-urban divide, reducing poverty and generating employment to the teeming millions. It is therefore, essential that India adopts a suitable policy framework that provides the required impetus to seize the opportunities and create an enabling business environment in order to keep the momentum of growth and holistic development.
It is equally important that the MSME sector must address the infrastructural deficiencies and is well empowered to meet the emerging challenges for its sustainable growth and survival in a globally competitive order.
The small and medium enterprises (SMEs) are contributing a lot to the financial growth of a nation. In developing countries, as some author argue, the giving of SMEs towards employment making is high because they tend to use more manual labour intensive production processes than large enterprise, boosting employment and leading to more equitable income distribution. In countries like India where there is a lot of difference in income levels and industrialization is not uniform, SMEs play a crucial role in employment generation (Srinivasan, 2009). They also provide livelihood opportunities through simple actions in agriculture based economies, nurture private enterprise and support the building up of systemic productive capacities and the creation of flexible economic systems, through linkages with the large organization.
The issues of sustainable development have attracted the notice of many scholar, policymakers, business practitioners as well as the centre of population alike. This recent development in the interest on sustainability, especially within the business landscape, is not only the focus of the developed nation, but also the developing countries like India. SMEs are claimed to be crisis shock absorbers (Wiboonchutikula, 2002) that would act as buffer for a country’s economy at times when large organization resort to severe measure of laying off workers during the rough period of economic decline. As such, promoting sustainable performance among SMEs is seen pivotal.
However, the contribution of the economic performance of SMEs is not consistent and still less than Large Enterprises (MSME, 2011). The reasons may be because of SMEs are having limited resources when compared to Large Enterprises. SMEs are known to face various problems and constraints, in the initial days leading many to close their businesses at early stage of operation (Taylor, 1999; Jeffoate, Chappell, and Feindt, 2002). In India, despite various support means made available to SMEs by the government, many still fail. It has been claimed that the failures were due to the lack of knowledge, ability, experience, insufficient capital, marketing, information, and technology among the entrepreneurs. These problems have created major stumbling blocks for SMEs to achieve sustainable performance.