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The Micro, Small and Medium Enterprises (MSMEs) are playing a momentous role in the overall economic development of our country where millions of people are unemployed or under-employed. Poverty and unemployment are two burning problems of the country today. The MSMEs play a vital role in the growth of the country. The MSMEs sector contributes significantly to the manufacturing output, employment and exports of the country. The strategy of economic development of any country that formulates programmes for removal of poverty by providing large scale employment, capital formation, effective mobilization of resources, balanced economic growth, expansion of trade and equitable distribution of national income with effective involvement and participation of all its citizens in the accomplishment of the goal, cannot neglect MSMEs Sector. This sector faces so many problems while competing with other large scale industries. If these problems are solved or efforts are taken to foster these challenges, this sector can prove itself as a developing engine. This paper deals with the identification of problems of the MSMEs and the study is empirical in nature based on the survey of 340 MSME units situated and working in the Erode district.