According to verified data from the World Bank, the Gross Domestic Product (GDP) in India was valued 3.1 trillion US dollars in 2021. India’s GDP accounts for 0.21 percent of the global economy. The MSME sector alone accounts for around 29% of the GDP and all domestic and international trade. MSMEs will be essential in helping India’s economy grow to $5 trillion over the next five years. Due to its contribution to the economic and social development of India, the MSME sector is very important to that nation. It does this by encouraging entrepreneurship, creating substantial employment opportunities at a cost that is lower than that of large industries, accelerating the industrialization of rural areas, addressing regional imbalances, and advancing financial inclusion and equality. According to the Indian government, the micro sector comprises more than 99% of all MSMEs in existence. MSMEs in the small and medium sectors made up, respectively, 0.52% and 0.01% of all estimated MSMEs. Of the expected total number of MSMEs, 51.25 percent are in rural areas and 48.75 percent are in urban areas. Compared to 20.37% held by women, 79.63% of MSMEs are owned by men. About 97% of all employment in the sector is in the micro sector. According to estimates from the small and medium sectors, MSMEs contributed to 2.88% and 0.16% of total employment, respectively.
The government has established an MSME Ministry with four statutory bodies, including the Khadi and Village Industries Commission (KVIC), which is in charge of promoting and developing khadi and village industries to provide employment opportunities in rural areas, the Coir Board, which is responsible for promoting the overall development of the coir industry and enhancing working conditions for those employed in it, the National Small Industries Corporation Limited (NSIC), which is in charge of promoting aiding and fostering growth of commercial micro and small enterprises in the country, the National Institute for Micro, Small, and Medium Enterprises (NI-MSME), which is in charge of entrepreneurship development and enterprise promotion, also facilitating business creation and conducting diagnostic development studies to inform policy development, and the Mahatma Gandhi Institute for Rural Industrialization (MGIRI), which is charged with promoting rural industrialization for a viable village economy, luring professionals and empowering traditional craftspeople, and fostering innovation through field tests, pilot studies, and R&D for new technologies utilizing regional resources.
The Indian government has launched a number of programs and initiatives as part of a comprehensive effort to promote the expansion and development of MSMES. Women’s entrepreneurship programs help female entrepreneurs start and run their businesses by offering loans and support through counseling. The innovation-encouraging incubation model helps inventors put their ideas, designs, or products into proper practice. In addition, the government contributes financially to the project to the tune of 75% to 80% of its overall cost. The Udyog Aadhaar memorandum plan helps MSMEs become more organized in their operations while also facilitating simple access to loans, credits, and subsidies. The quality management standards programs help business owners adopt and comprehend cutting-edge technology and high standards of quality. The government runs a number of initiatives, seminars, and campaigns to help entrepreneurs embrace cutting-edge technologies to raise the caliber of their products. The Grievance Monitoring System program is important since it ensures that businesses and the government can communicate. It addresses a variety of concerns and demands made by business owners to support the productive operation of MSMEs. The credit related capital subsidy scheme provides entrepreneurs and business owners with the newest technologies and financial support for expansion. Under the Zero Defect Zero Effect model of plan, concessions are granted if the manufactured goods do not comply with the certified requirements and are refused for export. In accordance with the Zero Defect Zero Effect scheme, the government must pay a certain sum of money.
The Government of India has created a number of policies to support the development of MSMEs in the nation, according to the India Brand Equity Foundation (IBEF). As of July 8, 2022, 10.03 million loans have been approved under the Pradhan Mantri MUDRA Yojana (PMMY) plan, and $9.15 billion had been distributed. MSMEs were given a 6.55 billion dollar Emergency Credit Line Guarantee Scheme (ECLGS) budget in the Union Budget for 2022–2023. The Indian government funded $808 million for the Raising and Accelerating MSME Performance program on March 30, 2022. (RAMP). The program aims to increase market and credit access, promote center-state links and cooperation, develop institutions and governance at the center and state levels, address late payment issues, and green MSMEs. The Indian government introduced the Special Credit Linked Capital Subsidy Scheme (SCLCSS) for the services industry in November 2021. This program will assist businesses in the services industry in meeting various technological criteria. The Ministry of Micro, Small, and Medium Enterprises introduced SAMBHAV in November 2021 as a nationwide awareness campaign to encourage local manufacturing and entrepreneurship and drive economic growth.
Globally, sustainability is a major area of concern, and the Indian government has made commitments to protect the environment and the world through a number of projects. One such program is the government’s “Make in India” with “Zero Defect & Zero Effect” initiative, which combines economic growth with sustainability and social inclusion and motivates MSMEs in the agricultural, manufacturing, and service sectors to continuously upgrade their quality standards in products and processes that are environmentally friendly. The government has been promoting a number of programs and regulations that can help these businesses adopt and up-scale their operations to become green MSMEs in order to assist MSMEs in adopting innovative and environmentally friendly technologies. A Scheme for Promoting Innovation, Rural Industry & Entrepreneurship (ASPIRE), Credit Linked Capital Subsidy for Technology Upgrading (CLCSS), and Design Clinic for Design Expertise to MSMEs are just a few of the programs that the Ministry of MSME and numerous other organizations and trade bodies have been helping MSMEs to take advantage of. Additionally, the Coir Board and the Khadi and Village Industries Commission (KVIC), who pave the way for MSMEs that are environmentally sustainable. The Coir Board was established by the Government of India under the Coir Sector Act, 1953, for the overall sustainable development of the coir industry in India. In collaboration with other trusts and organizations involved in the development of rural areas, KVIC, an organization under the Ministry of MSMEs, aims to plan, promote, facilitate, organize, and help in the establishment and development of Khadi and Village Industries in the rural districts.
IBEF reports that the national government will launch a new program in June 2022 called “Promotion of MSMEs in North Eastern Region and Sikkim.” By constructing mini-technological centers, growing both new and existing industrial estates, and promoting tourism, this project’s primary goal was to promote MSMEs in the North East. In November 2021, Google and the Small Industries Development Bank of India (SIDBI) signed an agreement to test social impact financing, offering microbusinesses financial support up to US$ 133,939.60 at discounted interest rates. Google India Pvt. Ltd. GIPL would provide a corpus of US$ 15 million for micro companies as a crisis reaction to COVID-19 in order to revitalize the Indian MSME sector. Predictive analytics-based shipment tracking was introduced by online freight forwarder Freightwalla in November 2021 for MSME exporters and importers to help companies reduce the risk of shipment delays and boost supply chain effectiveness. A supply chain financing (SCF) platform called Cashinvoice announced in November 2021 that it would provide MSMEs with over US$ 1.33 billion in funding in the coming year after securing Pre-Series A funding of US$ 1 million from Accion Venture Lab. MSMEs received marketing support in October 2021 from Sundaram Finance and the MSME Development Institute (Chennai). Through an incubator program that will provide inventors the chance to explore and foster ideas for the manufacture of new products, MSMEs will undergo managerial and entrepreneurial development. Boeing awarded a contract to the MSME Aerospace Engineers Private Limited of Tamil Nadu in September 2021 to manufacture and deliver essential aircraft components.
Without fostering resilient MSMEs in developing nations, we cannot fulfill the objectives of the 2030 Agenda for Sustainable Development. In order to support an inclusive approach in the form of policies, regulations, and programs that support formalizing MSMEs and providing the necessary finance, training, and enabling environment of growth and sustainability, private-public partnerships, national governments, and international bodies must come together.
