 "Garment, textile, business, MSME, sme, jobs, labour, manufacturing, local, economy")
The UN is celebrating Tuesday as International MSME Day, a sector the government says is critical for India’s industrial development, employment generation and poverty reduction.
What are MSMEs?
Micro, small, and medium enterprises are categorised based on investment in plant and machinery or equipment. A micro enterprise is one where the investment in plant, machinery or equipment does not exceed Rs 1 crore and the annual turnover does not exceed Rs 5 crore.
A small enterprise is where the investment in plant and machinery or equipment does not exceed 10 crore and the turnover does not exceed Rs 50 crore.
A medium enterprise is where the investment in plant and machinery or equipment does not exceed Rs 50 and turnover does not exceed Rs 250 crore.
MSME sector in India
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India has 63.39 million MSMEs that employ more than 111 million people, as per the 73rd round of the National Sample Survey (NSS) conducted by the National Sample Survey Office (NSSO), Ministry of Statistics & Programme Implementation, during 2015-16.
The micro sector, with 63.05 million estimated businesses, accounts for more than 99 per cent of the total estimated MSMEs.
The small sector (331,000 businesses) and the medium sector (5,000 businesses) accounted for 0.52 per cent and 0.01 per cent of total estimated MSMEs.
Out of 63.38 million estimated MSMEs, 51.25 per cent of MSMEs are in rural areas and 48.75 per cent are in urban areas.
According to the NSS findings quoted in MSME ministry’s Annual Report 2020-21, males constituted over 79 per cent of the total ownership in micro enterprises in India and while females accounted for approximately 20.4 per cent of ownership.
It is important to note that a large number of MSMEs exist in the informal sector and are not registered with any statutory authority, according to the Report of the Expert Committee on Micro, Small and Medium Enterprises, Reserve Bank of India.
Contribution of MSMEs to economy
According to the MSME ministry, the share of MSME Gross Value Added (GVA) in India's economy is as follows:
The share of MSME GVA in Gross Domestic Product (GDP) was 30.50 per cent in 2018-19, and 2019-20 but it dropped to 26.83 per cent in 2020-21.
Share of export of MSME-related products in all India exports was 49.77 per cent in 2019-20, 49.35 per cent in 2020-21, 45.03 in 2021-22 and 42.67 per cent in 2022-23 (August).
Policies supporting MSME growth
The Small Industries Development Bank of India (SIDBI) is the apex body responsible for the development of the MSME sector. Recognising the significance of MSMEs, the Indian government has implemented various policies and initiatives to promote their growth:
The Micro, Small, and Medium Enterprises Development (MSMED) Act, 2006: The act provides a legal framework for the promotion, development, and enhancement of competitiveness of MSMEs. It also establishes the National Small Industries Corporation (NSIC) and various schemes to support their growth.
Credit Support and Schemes: The government has introduced schemes such as the Pradhan Mantri Mudra Yojana (PMMY), Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), and Interest Subvention Scheme to facilitate easy access to credit and improve financial inclusion for MSMEs.
Technology Upgradation: Initiatives like the Credit Linked Capital Subsidy Scheme (CLCSS) and the Technology Upgradation Fund Scheme (TUFS) provide financial assistance to MSMEs for upgrading their technology and machinery, enhancing their competitiveness.
Challenges facing MSME sector
Some of the challenges that persist include limited access to finance, infrastructure bottlenecks, skill gaps, low adoption of advanced technology, and logistical limitations for last-mile deliveries.
International MSME Day
MSMEs account for 90 per cent of businesses, 60 to 70 per cent of employment and 50 per cent of worldwide GDP, according to the United Nations. The United Nations General Assembly (UNGA) designated June 27 as International MSME Day to highlight the potential of MSMEs worldwide and build resilient supply chains.
This year's UN theme focuses on women and young people’s entrepreneurship and resilient supply chains.
"We must create environments that support MSMEs and drive financial inclusion, to provide equal access to markets and finance. We need to help strengthen the ability of these businesses to withstand hard times. And we need to work to build sustainable supply chains that benefit workers and respect the environment." UN chief António Guterres said in a statement.
He added that in doing so, the world community can harness the power of MSMEs to help to reduce inequality, raise living standards, and protect communities and the environment.
