Two states where the MSME sector has a sizable presence are Uttar Pradesh and Maharashtra. While Uttar Pradesh has the largest share of MSME enterprises, numbering 31.13 lakh, Maharashtra has the largest number of workers employed in the MSME segment, with 64.65 lakh workers. Uttar Pradesh, though ranks first in the number of enterprises, is ranked fifth in terms of MSME employment (57.91 lakh workers). Maharashtra ranks first in terms of MSME employment, but is third in terms of MSME enterprises (25.82 lakh units).
The disparities in enterprise and employment rankings is not surprising given the diversity of the MSME sector across the two states. There are some similarities, too, especially in the distribution of activities across manufacturing and services and ownership pattern.
According to the most recent MSME survey done in 2006-07, the manufacturing sector accounts for just a fourth of the MSME enterprises in both states. While the share of manufacturing enterprises is 24.1% in UP, it is a little lower at 23.8% in Maharashtra.
When it comes to ownership an overwhelming number of units are proprietary concerns in both states.
While 95.4% of the units are proprietary concerns in UP, 94.6% units are so in Maharashtra.
The disparities between the structure of the MSME segment are even more striking, ranging from location of units, gender composition of employment, fuel consumption patterns, funding patterns, share of working units, per unit employment, investment and output. In Maharashtra, the MSME segment is predominantly urban which almost have a two-third share and only 36.7% enterprises are in the rural areas. In sharp contrast, the MSMEs in UP are more rural with more than a half (51.1%) located in the hinterlands.
The progressive nature of the MSME sector is best brought out by the patterns in power usage. While 20.9% MSME units use electricity as the main source of power in Maharashtra the share of this segment is a miniscule 9.3% in UP. Similarly while 78.3% of the MSME units in Uttar Pradesh uses no power, only 70% of the Maharashtra units is bereft of power.
The disparities are sharper on credit availability. While 88.7% of enterprises are entirely self-financed in Maharashtra this share is a staggering 97.5% in UP. It should also be noted that while 8.6% of the MSME units in Maharashtra could avail of some form of institutional finance, only 2% could garner any institutional finance in UP.
Despite the poor availability of institutional finance, the MSME segment in UP scores better on survival rates. Though data is available only of registered units, it shows that 62.9% of the units were working in Uttar Pradesh, only 57.4% of the registered units were working in Maharashtra during 2006-07.
The numbers on per unit employment, investments and output of the registered units however show that the MSME segment in Maharashtra is far ahead of UP, especially in the scale of operations. This is despite UP having a much larger share of registered units in the MSME segment (6%) than Maharashtra (3.4%).
While per capita employment in the registered MSME units in UP is just 4.1 persons, it is four times larger at 12.6 person per unit in Maharashtra. Manufacturing enterprises account for 45.1% of MSME employment in UP, while it is 48.8% in Maharashtra. Women’s share in employment is 9.2% in UP, but is 14.7% in Maharashtra, thanks to the larger urban domination of MSME units in the state.
The per capita investment in plant & machinery in Maharashtra is four times larger than that of Uttar Pradesh. While the average size of investments in plant & machinery is just R4 lakh in UP, it is R17.2 lakh in Maharashtra.
The difference is glaring in the level of output as well. The per capita output of registered units is R43.6 lakh in UP against R127.7 lakh in Maharashtra. While the total output of the registered MSME units in Uttar Pradesh is R81,688 crore that of Maharashtra is R1,11,480 crore.
More interesting is the industry-wise distribution of the MSME sector in the two states. In both states retail sale is the most widespread activity. Retail accounts for six of the top 10 activities of the MSME sector in UP, and five of the top 10 in Maharashtra. Retail sale of food, beverage and tobacco in specialised stores is the top most activity with 8.42 lakh enterprises in UP and 3.89 lakh units in Maharashtra engaged in these.
In manufacturing, the most number of units units is in wearing apparel and grain mill products. While the two activities, with 1.75 lakh units and 0.79 units respectively, are ranked in the third and eighth positions in Maharashtra they are ranked in the sixth and fifth positions in Uttar Pradesh, with 1.1 lakh and 1.5 lakh units, respectively.
Interestingly, restaurants, bars and canteens and hair dressing and other beauty treatments are ranked as the sixth and seventh most popular areas in Maharashtra, these activities fare much lower in the eighth and eleventh positions in Uttar Pradesh.
