The increase is expected on account of increasing demand from the western and emerging markets.
"Earlier, it (the share of MSMEs in the country's total exports) was 40%, but now it has reduced to 36% due to demand slowdown in western markets," Muniyappa said, adding that "the contribution is likely to be up to 50% by 2017".
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He was talking to reporters on the sidelines of a CII function here.
The US and Europe which together account for 60% of the country's total exports.
The MSME sector contributes 8% to India's Gross Domestic Product (GDP) and 45% to manufactured output. The sector provides employment to over 8 crore people engaged in over 3.6 crore units, producing more than 6,000 products.
Further, Muniyappa said, adequate credit is paramount to the success of micro and small units.
To ensure better flow of credit to MSEs by minimising risk perception of banks/financial institutions in lending without collateral security, he said, the government is implementing the Credit Guarantee Scheme.
The scheme provides guarantee cover of up to 85% on collateral free credit facility extended by lending institutions to new and existing units for loans up to Rs 100 lakh.
"Till April 2013, more than 11 lakh proposals have been approved under the scheme providing guarantee cover for total sanctioned amount of Rs 54,322 crore," Muniyappa said.
National Small Industries Corporation (NSIC) CMD H P Kumar said, "Dedicated SME exchanges have been established to facilitate the MSME sector, but these have not received desired response. Hence, there is a need to refine our efforts primarily in terms of criteria of listing and transaction costs."