Service-sector MSMEs provide maximum job opportunities

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CRISIL has analysed the employee strength in 3,500 micro, small, and medium enterprises (MSMEs) in the manufacturing and service sectors in 2012-13 (refers to the financial year, April 1 to March 31). The study was conducted to compare their individual employment generation potential and the composition of permanent versus contractual workforce. The study indicates that employment-intensity in service-sector MSMEs is more than double that in the manufacturing sector.

On average, service-sector enterprises employ 168 people per unit, as compared to 80 people per manufacturing unit. However, the ratio of permanent and contractual employees among MSMEs in both sectors is almost the same, at approximately 2:1.

The key service segments promising higher employment opportunities are security agencies, automotive dealers and logistics providers -- a trend that underscores the potential of service enterprises to absorb workers who are not highly skilled, and hence need appropriate policy support for their development.

Note: The analysis is based on the latest audited financial statements and information of CRISIL-rated MSMEs. CRISIL rates over 50,000 MSMEs in India. The sample does not include key service sectors such as banking, financial services, and insurance (BFSI), as these activities are generally not undertaken by MSMEs owing to their small size of operations. This fortnightly tracker presents to our readers insights on MSMEs, a key element of the Indian economy.