{"id":12894,"date":"2022-01-24T15:18:44","date_gmt":"2022-01-24T09:48:44","guid":{"rendered":"https:\/\/triumphias.com\/blog\/?p=12894"},"modified":"2025-07-07T14:53:36","modified_gmt":"2025-07-07T09:23:36","slug":"micro-small-medium-enterprises-msmes-imperative-to-lift-indian-economy","status":"publish","type":"post","link":"https:\/\/triumphias.com\/blog\/micro-small-medium-enterprises-msmes-imperative-to-lift-indian-economy\/","title":{"rendered":"Micro, Small &#038; Medium Enterprises (MSMEs)\u2013 IMPERATIVE TO LIFT INDIAN ECONOMY"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_68 ez-toc-wrap-center counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >What's Inside this Blog!<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/triumphias.com\/blog\/micro-small-medium-enterprises-msmes-imperative-to-lift-indian-economy\/#Micro_Small_Medium_Enterprises_MSMEs%E2%80%93_IMPERATIVE_TO_LIFT_INDIAN_ECONOMY\" title=\"Micro, Small &amp; Medium Enterprises (MSMEs)\u2013 IMPERATIVE TO LIFT INDIAN ECONOMY\">Micro, Small &amp; Medium Enterprises (MSMEs)\u2013 IMPERATIVE TO LIFT INDIAN ECONOMY<\/a><ul class='ez-toc-list-level-2' ><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/triumphias.com\/blog\/micro-small-medium-enterprises-msmes-imperative-to-lift-indian-economy\/#Introduction_Micro_Small_Medium_Enterprises\" title=\"Introduction: Micro, Small &amp; Medium Enterprises\u00a0\">Introduction: Micro, Small &amp; Medium Enterprises\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/triumphias.com\/blog\/micro-small-medium-enterprises-msmes-imperative-to-lift-indian-economy\/#What_are_MSMEs\" title=\"What are MSMEs?\">What are MSMEs?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/triumphias.com\/blog\/micro-small-medium-enterprises-msmes-imperative-to-lift-indian-economy\/#MSMEs_contribution_to_Indian_economy\" title=\"MSMEs&#8217; contribution to Indian economy\">MSMEs&#8217; contribution to Indian economy<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/triumphias.com\/blog\/micro-small-medium-enterprises-msmes-imperative-to-lift-indian-economy\/#Key_drivers_of_the_MSME_sector\" title=\"Key drivers of the MSME sector\">Key drivers of the MSME sector<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/triumphias.com\/blog\/micro-small-medium-enterprises-msmes-imperative-to-lift-indian-economy\/#Policies_and_developments\" title=\"Policies and developments\">Policies and developments<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/triumphias.com\/blog\/micro-small-medium-enterprises-msmes-imperative-to-lift-indian-economy\/#Impact_of_digitalisation\" title=\"Impact of digitalisation\">Impact of digitalisation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/triumphias.com\/blog\/micro-small-medium-enterprises-msmes-imperative-to-lift-indian-economy\/#Future_prospects_for_MSMEs\" title=\"Future prospects for MSMEs\">Future prospects for MSMEs<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Micro_Small_Medium_Enterprises_MSMEs%E2%80%93_IMPERATIVE_TO_LIFT_INDIAN_ECONOMY\"><\/span><span style=\"font-family: georgia, palatino, serif;\">Micro, Small &amp; Medium Enterprises (MSMEs)\u2013 IMPERATIVE TO LIFT INDIAN ECONOMY<\/span><span class=\"ez-toc-section-end\"><\/span><\/h1>\n<p><span style=\"color: #ff0000;\"><strong>RELEVANCE : GS paper 3 \/ development and employment<\/strong><\/span><\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.ibef.org\/\/uploads\/blog\/blog_30-12-2021_msme_sector_main.jpg\" alt=\"MSME Sector \u2013 Imperative to Lift Indian Economy\" \/><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Introduction_Micro_Small_Medium_Enterprises\"><\/span><strong>Introduction: Micro, Small &amp; Medium Enterprises\u00a0<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Micro, small and medium enterprises (MSMEs) are considered the pillars of Indian economy due to their considerable contribution to GDP, exports and employment generation. MSMEs started with the establishment and growth of India&#8217;s khadi and coir industry, along with various industries situated in rural areas. Most micro and small businesses belong to food and\u00a0agriculture sectors. Medium-sized firms are primarily within automotive, pharmaceutical, textile and\u00a0chemical industries. The MSME sector has coordinated and worked with relevant ministries, state governments and stakeholders to develop India\u2019s rural economy. India has an estimated 633.88 lakh MSMEs, of which 324.88 lakh MSMEs are based in rural areas and 309 lakh are from urban areas.<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.ibef.org\/\/uploads\/blog\/blog_30-12-2021_msme-1.jpg\" \/><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_are_MSMEs\"><\/span><strong>What are MSMEs?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>MSMEs are mainly engaged in the development, manufacturing, processing or storage of goods and commodities. They are classified based on investment and turnover, as per the following criteria.<\/p>\n<table border=\"1\" width=\"488\" cellspacing=\"0\" cellpadding=\"0\">\n<tbody>\n<tr>\n<td nowrap=\"nowrap\"><strong>Classification<\/strong><\/td>\n<td nowrap=\"nowrap\"><strong>Micro<\/strong><\/td>\n<td nowrap=\"nowrap\"><strong>Small<\/strong><\/td>\n<td nowrap=\"nowrap\"><strong>Medium<\/strong><\/td>\n<\/tr>\n<tr>\n<td><strong>Manufacturing &amp;<br \/>\nServices<\/strong><\/td>\n<td>Investment &lt; Rs. 1 crore (US$ 0.31 million)<br \/>\n&amp; Turnover &lt; Rs. 5 crore (US$ 0.6 million)<\/td>\n<td>Investment &lt; Rs. 10 crore (US$ 3.1 million)<br \/>\n&amp; Turnover &lt; Rs. 50 crore (US$ 6.8 million)<\/td>\n<td>Investment &lt; Rs. 50 crore (US$ 6.8 million)<br \/>\n&amp; Turnover &lt; Rs. 250 crore (US$ 34 million)<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><span class=\"ez-toc-section\" id=\"MSMEs_contribution_to_Indian_economy\"><\/span><strong>MSMEs&#8217; contribution to Indian economy<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The\u00a0MSME sector in India\u00a0gave a major boost to the economy. Over 63 million MSMEs spread across the country contributed 30.5% to India&#8217;s GDP in FY19 and 30% in FY20. It also created many employment opportunities. Based on a study conducted by the Ministry of Statistics &amp; PI between July 2015 and June 2016, the MSME sector employed 111 million workers. Compared with large-scale\u00a0companies, MSMEs\u00a0aided in the industrialisation of rural\u00a0areas at minimal capital cost. The\u00a0sector has made significant contributions to the country&#8217;s socio-economic growth and complemented major industries as well. MSMEs account for approximately 40% of India&#8217;s total exports, 6.11%\u00a0of GDP from the\u00a0manufacturing sector\u00a0and 24.63%\u00a0of GDP from the\u00a0services sector.<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.ibef.org\/\/uploads\/blog\/blog_30-12-2021_msme-2.jpg\" \/><\/p>\n<p><strong>Source:\u00a0<\/strong>Ministry of Micro, Small and Medium Enterprises \u2013 Annual Report<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Key_drivers_of_the_MSME_sector\"><\/span><strong>Key drivers of the MSME sector<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul class=\"pageul-blg\">\n<li><strong>Favourable industrial policies<\/strong>: Ease of doing business is an essential factor, achieved through various policies, incentives, labour laws and regulatory clearance.<\/li>\n<li><strong>Encouragement of FDIs<\/strong>: Liberalised FDI policies led to overall productivity and competitiveness in the MSME sector.<\/li>\n<li><strong>Technology<\/strong>: Has played a crucial role in enhancing operations in the MSME sector and connecting with global value chains.<\/li>\n<li><strong>Access to capital<\/strong>: The government finances MSMEs through schemes such as Credit Guarantee Trust Fund for Micro &amp; Small Enterprises (CGTMSE) and Credit Linked Capital Subsidy (CLCSS).<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Policies_and_developments\"><\/span><strong>Policies and developments<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The MSME sector is governed under the Micro, Small and Medium Enterprises Development Act, 2006. This act came into effect to facilitate and promote the sector and enhance its competitiveness. Schemes launched by the government under this act are:<\/p>\n<ul class=\"pageul-blg\">\n<li><strong>Prime Minister Employment Generation Program (PMEGP)<\/strong>\u00a0\u2013 A bank-appraised and -financed programme to generate employment opportunities<\/li>\n<li><strong>Credit Guarantee Trust Fund for Micro &amp; Small Enterprises (CGTMSE)<\/strong>\u00a0\u2013 Jointly set by Ministry of MSME and Small Industry Development Bank of India (SIDBI) to catalyse the flow of credit to micro and small enterprises<\/li>\n<li><strong>Interest Subvention Scheme<\/strong>\u00a0\u2013 Introduced by Reserve Bank of India (RBI) to provide relief of up to 2% of interest to legal MSMEs<\/li>\n<li><strong>Credit Linked Capital Subsidy Scheme<\/strong>\u00a0\u2013 Providing upfront 15% subsidy to facilitate technology upgradation in MSMEs<\/li>\n<li><strong>Gram Udyog Vikas Yojna<\/strong>\u00a0\u2013 One of the two components of Khadi Gramodyog Vikas Yojana, aimed at promoting village industries<\/li>\n<\/ul>\n<p>The Indian government announced various policies to promote MSMEs in India. Key policies include:<\/p>\n<ul class=\"pageul-blg\">\n<li>SAMBHAV, a national-level awareness programme to promote economic growth<\/li>\n<li>Collateral-free automatic loans up to Rs. 3,00,000 crore (US$40.85 billion) for MSMEs to buy raw materials, meet operational liabilities and restart businesses<\/li>\n<li>Revision of MSME&#8217;s definition to provide maximum support to the sector<\/li>\n<li>Creation of attractive opportunities for domestic firms by disallowing global tenders in procurements of up to Rs. 200 crores (US$26.5 million)<\/li>\n<li>Commitment of the government and public sector units (PSUs) to clear MSME debts within 45 days<\/li>\n<\/ul>\n<p>The government has also launched various campaigns such as\u00a0<a href=\"https:\/\/www.ibef.org\/government-schemes\/skill-india\" target=\"_blank\" rel=\"noopener noreferrer\">Skill India<\/a>, Startup India,\u00a0<a href=\"https:\/\/www.ibef.org\/government-schemes\/digital-india\" target=\"_blank\" rel=\"noopener noreferrer\">Digital India<\/a>\u00a0and Made in India to boost this sector\u2019s growth and enhance productivity.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Impact_of_digitalisation\"><\/span><strong>Impact of digitalisation<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The MSME sector experienced massive growth over the past two decades, despite limited use of technology. It has potential to scale up via effective utilisation of technology and implementation of e-markets and digitalisation in manufacturing processes. Various steps taken by the government and MSMEs include:<\/p>\n<ul class=\"pageul-blg\">\n<li>The Ministry of MSME has decided to digitalise the entire system of administration to make it more transparent, time-bound and result-oriented.<\/li>\n<li>The ministry\u00a0invested Rs. 200 crores (US$ 26.5 million) to construct\u00a020 technology centres and Rs. 20 crores (US$ 2.65 million) for 100 extension centres.<\/li>\n<li>The sector recently witnessed growth due to increased internet penetration and customer&#8217;s adaptation to digital payments, fuelled by B2C e-commerce players.<\/li>\n<li>MSMEs are collaborating with FinTechs to obtain prompt collateral-free financing.<\/li>\n<\/ul>\n<p>Digitalisation will provide transparency across the supply chain and allow MSMEs to scale up operations.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Future_prospects_for_MSMEs\"><\/span><strong>Future prospects for MSMEs<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>MSMEs are key to the US$ 5 trillion Indian economy. However, for India to grow rapidly in the next decade, MSMEs must mature into large-scale\u00a0corporations. India needs to triple the number of large-scale businesses, with over 1,000 mid-range businesses currently scaling up. Budget allocation for the MSME sector in FY22 more than doubled to Rs. 15,700 crores (US$ 2.14 billion) from Rs. 7,572 crores (US$1.03 billion) in FY21. Financial support from state and central governments and favourable policies can push India into becoming a high-growth manufacturing-based economy. India can meet its goal of achieving sustainable fiscal and socio-economic growth through a clear vision and concrete plans involving MSMEs.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Micro, Small &amp; Medium Enterprises (MSMEs)\u2013 IMPERATIVE TO LIFT INDIAN ECONOMY RELEVANCE : GS paper 3 \/ development and employment<\/p>\n","protected":false},"author":1,"featured_media":12129,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[42,844,1038,43],"tags":[],"class_list":["post-12894","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general-studies-iii-technology-economic-development-bio-diversity-environment-security-and-disaster-management","category-gs","category-gs-mains","category-indian-economy"],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/12894","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/comments?post=12894"}],"version-history":[{"count":2,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/12894\/revisions"}],"predecessor-version":[{"id":31402,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/12894\/revisions\/31402"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/media\/12129"}],"wp:attachment":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/media?parent=12894"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/categories?post=12894"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/tags?post=12894"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}