Q.Explain the major problems faced by micro and small enterprises in India.

Small size brings weaknesses: micro and small enterprises struggle mainly with finance, marketing, materials, technology and competition.

Despite their importance, micro and small enterprises face serious difficulties:

1. Shortage of finance — little own capital and difficulty getting bank loans (lack of security) force them to depend on costly informal lenders.
2. Problems in marketing — they cannot afford advertising, branding or a wide distribution network, and may be exploited by middlemen; competing with large firms is hard.
3. Shortage and poor quality of raw materials — buying in small quantities means higher prices, lower priority from suppliers and sometimes poorer materials.
4. Outdated technology — many use old machines and simple methods, lowering productivity and quality.
5. Shortage of skilled labour and managerial talent — unable to pay high wages, they lose skilled workers and trained managers to large firms; the owner often does everything alone.
6. Competition from large enterprises — large firms enjoy economies of scale, better technology and strong brands, and can sell cheaper.
7. Under-utilisation of capacity — weak demand, finance and material problems keep many units running below full capacity, raising cost per unit. …

Avoid vague one-word answers like 'money problem' — name the specific problem (shortage of finance, high cost of informal credit) and explain it briefly. Do …