More recently, enhancing SMEs has been viewed as an effective way of fostering the private sector's contribution to both

the growth and the equity objectives of development. SMEs are found in existence in every country. They play a key role in the industrialization of developing country. This is because they provide immediate large-scale employment and have a comparatively higher labour-capital ratio, they have a shorter gestation period and relatively smaller markets to be economic. They need lower investments, offer a method of ensuring a more equitable distribution of national income and facilitate an effective mobilization of resources of capital and skill which might otherwise remained unutilized and they stimulate the growth of industrial entrepreneurship and promote a more diffused pattern of ownership and location.

SMEs have been given an important place in the framework of Indian planning since beginning both for economic and ideological reasons. Today, India operates the largest and oldest programmes for the development of SMEs in any developing country. As a matter of fact, small sector has now emerged as a dynamic and vibrant sector for the Indian economy in the recent years. Of late, the state Government also is giving serious consideration for the development of SMEs particularly through different selfemployment schemes

SMEs have been given an important place in the framework of Indian planning since beginning both for economic and ideological reasons. Today, India operates the largest and oldest programmes for the development of SMEs in any developing country. As a matter of fact, small sector has now emerged as a dynamic and vibrant sector for the Indian economy in the recent years. Of late, the state Government also is giving serious consideration for the development of SMEs particularly through different selfemployment schemes

The Micro, Small & Medium Enterprises Development Act, 2006 which became operational from October 2, 2006, been changed the earlier concept of Industries to Enterprises. The Act aligns the definition of small enterprises with the internationally accepted definition, provides protection to small enterprises from delayed payments by the large corporates and provides a definition to medium enterprises. The Act has brought a paradigm shift in the treatment to small enterprises by bringing the service sector under the definition of MSMEs.
As per this act, enterprises have been classified broadly into: (1) Enterprises engaged in the manufacture/production of goods pertaining to any industry; and (2) Enterprises engaged in providing/rendering of services. Manufacturing Enterprises have been defined in terms of investment in plant and machinery (excluding land & buildings) and further classified into: (a) (b) (c) Micro Enterprises investment up to Rs 25 lakh; Small Enterprises investment above Rs 25 lakh & upto Rs 5 crore; Medium Enterprises investment above Rs.5 crore & upto Rs. 10 crore.

The Service enterprises have been defined in terms of their investment in equipment (excluding land & buildings) and further classified into: (a) (b) Micro Enterprises investment up to Rs. 10 lakh; Small Enterprises investment above Rs. 10 lakh & upto Rs. 2 crore;

(c)

Medium Enterprises investment above Rs.2 crore & upto Rs. 5 crore

 Small

is beautiful Innovative and productive Individual tastes, fashions and personalized services Symbol of national identity Happier in work Always winners of the game Dispersal over wide areas Helps in rapid industrialization Provide large scale employment

 Creation

of vast employment opportunities Decentralization of industries by creating industrial estates Equal distribution of national income Raise standard of living Proper utilization of untapped natural resources Development of backward areas

 Sole

proprietorship Partnership Joint stock company Co-operative society

Nature: Sole ownership One-man control Unlimited risk Undivided risk No separate entity of the firm No government regulations

 Easy

and simple formation Smooth management Promptness in decision-making Direct motivation and incentive to work Personal touch with customers Secrecy Social advantages

 Limited

financial resources Limited managerial ability Unlimited liability Lack of continuity

 Section

4 of the IP Act, 1932 defines partnership as the relationship between persons who have agreed to share the profits of a business carried on by all or any one of them acting for all. Characteristics: Number of persons Contractual relationship No legal distinction between firm and its partners Unlimited liability

 Easy

formation Flexibility Pooling of resources and skill Division of risks Strong credit position Less incidence of tax Encouragement of mutual trust, personal element in business etc.

 Limited

resources Unlimited liability Instability Lack of harmony of interest