{"id":39449,"date":"2022-01-20T11:48:51","date_gmt":"2022-01-20T06:18:51","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=39449"},"modified":"2025-01-02T18:12:59","modified_gmt":"2025-01-02T12:42:59","slug":"msme-sector-in-india-potential-and-future-prospects","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/msme-sector-in-india-potential-and-future-prospects\/","title":{"rendered":"MSME Sector in India: Potential and Future Prospects"},"content":{"rendered":"\n<p class=\"has-drop-cap\">MSME sector is acknowledged as the\nprominent pillar of the Indian economy owing to their massive contribution to\nGDP, exports, and job creation. In India, most small and micro enterprises\nbelong to the agro and food sectors. On the contrary, the medium-sized enterprises\nbelong to the pharmaceutical, auto, and chemical sectors. The MSME sector has\nbeen working in coordination with several state governments, ministries, and\nstakeholders to boost Indian&#8217;s Rural Economy.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/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 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/msme-sector-in-india-potential-and-future-prospects\/#Analyzing_the_Prowess_of_MSME_sector_in_India\" >Analyzing the Prowess of MSME sector in India<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/msme-sector-in-india-potential-and-future-prospects\/#How_is_MSME_Sector_boosting_the_Indian_Economy\" >How is MSME Sector boosting the Indian Economy?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/msme-sector-in-india-potential-and-future-prospects\/#Potential_Stimulants_that_is_helping_MSME_sector_grow_at_Healthy_rate\" >Potential Stimulants that is helping MSME sector grow at Healthy rate<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/msme-sector-in-india-potential-and-future-prospects\/#Analyzing_Governments_Efforts_to_Promote_MSME_Sector_in_India\" >Analyzing Government&#8217;s Efforts to Promote MSME Sector in India<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/msme-sector-in-india-potential-and-future-prospects\/#Role_of_Digitalization_in_the_growth_of_MSME_sector\" >Role of Digitalization in the growth of MSME sector&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/msme-sector-in-india-potential-and-future-prospects\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Analyzing_the_Prowess_of_MSME_sector_in_India\"><\/span>Analyzing the Prowess of MSME sector in India<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul>\n<li>Presently, India has around 6.3 crore MSMEs. According to the date of the MSME Ministry, as of Nov 26, 2021, the <a href=\"https:\/\/corpbiz.io\/msme-registration\" title=\"MSME Registration\"><strong>MSME registration<\/strong><\/a> portal (presently known as the Udyam Registration portal) registered 5,767,734 MSMEs. The bifurcation of the registration figure is as follow;<\/li>\n<\/ul>\n\n\n\n<ol>\n<li>Micro-enterprises = 5,441,220<\/li>\n\n\n\n<li>Small Enterprises = 293,555<\/li>\n\n\n\n<li>Midsized enterprises = 32,959<\/li>\n<\/ol>\n\n\n\n<ul>\n<li>The MSME sector contribution toward the nation&#8217;s <strong>GDP<\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Gross_domestic_product\"><strong>[1]<\/strong><\/a><\/sup> stood at 29 percent. This growth is credited to the ever-increasing demand in domestic as well as international markets. <\/li>\n\n\n\n<li>The BSE SME platform is projected to witness more than sixty small and medium enterprises entering the market in one year (FY 2021-22) to bring up equity funds catering to business needs.<\/li>\n\n\n\n<li>The initial public offering route has seen 16 SMEs making market entry; they procured Rs 100 crore (US$ 13.74 million) in 2020.<\/li>\n\n\n\n<li>MSMEs are being incentivized to trade their offerings on the e-commerce portal, especially via GeM i.e., Government e-Marketplace. It is a government-backed portal that enables Ministries and PSUs to source their procurement. <\/li>\n\n\n\n<li>As on Nov 26, 2021, the GeM portal has secured around 8.16 million orders worth Rs 159,483 crore from 3.1 million registered sellers. The said quantum of order had served more than 55,929 buyer organizations.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_is_MSME_Sector_boosting_the_Indian_Economy\"><\/span>How is MSME Sector boosting the Indian Economy?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul>\n<li>The\nMSME sector is giving a much-needed boost to the Indian Economy. Around 63 mn\nMSMEs operating pan India contributed 30.5% to the nation&#8217;s GDP in FY 2019 and\n30% in FY2020.<\/li>\n\n\n\n<li>It\nhas also created ample job opportunities across different sectors. As per the\nMinistry of Statistics &amp; PI data released in 2016, the MSME sector had\ncreated around 111 million jobs in India.<\/li>\n\n\n\n<li>When\ncontrasted with the large entities, MSMEs have played a prominent role in the\nindustrialization of rural areas without conceding too much capital cost.<\/li>\n\n\n\n<li>The\nsector has made considerable contributions to the nation&#8217;s socio-economic\ngrowth and supported prominent industries. Presently, the MSME sector accounts\nfor 40 percent of the nation&#8217;s overall export and around 25 percent of GDP from\nthe service sector.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Potential_Stimulants_that_is_helping_MSME_sector_grow_at_Healthy_rate\"><\/span>Potential Stimulants that is helping MSME sector grow at Healthy rate <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Amicable industrial policies:<\/strong> Relaxed industrial policies have played\na key role in boosting the MSME sector in India. The amicable norms pertaining\nto labor and regulatory requirements have enabled this sector to grow healthy.<\/p>\n\n\n\n<p><strong>Encouragement of FDIs:<\/strong> The influx of overseas players has\npoured considerable investment into the MSME sector. This aids MSMEs in\nadopting better technologies and resources, thereby ensuring improved productivity\nand competitiveness in the given marketplace.<\/p>\n\n\n\n<p><strong>Technology:<\/strong> The advent of cutting-edge technologies\nand improved production methods have aided MSMEs in improving their overall\nsupply chain and productivity.<\/p>\n\n\n\n<p><strong>Access to capital:<\/strong> Several credit schemes launched by GOI\nare backing up MSMEs with adequate financial support to meet productivity needs\nwith ease and maintain a healthy interplay with suppliers.<\/p>\n\n\n\n<p>The government schemes like Credit Linked\nCapital Subsidy and Credit Guarantee Trust Fund for Micro &amp; Small\nEnterprises are presently in action and facilitating easy funding without any\nhassle.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Analyzing_Governments_Efforts_to_Promote_MSME_Sector_in_India\"><\/span>Analyzing Government&#8217;s Efforts to Promote MSME Sector in India<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>Intending to speed up the growth of the\nMSME sector in India, GOI has released the following schemes and policies to\nserve such a purpose.<\/em><\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Prime Minister Employment Generation Program (PMEGP)<\/h3>\n\n\n\n<p>PMEGP aims at strengthening employment\nstanding in the rural region of the country. For this purpose, the scheme\nfacilitates necessary fiscal aid (within a given threshold of Rs 10 lakh-Rs 25\nlakhs) to the upcoming project in rural areas. This will aid in preventing the\nmigration of rural youth to urban areas.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Credit Guarantee Trust Fund for Micro &amp; Small Enterprises (CGTMSE)<\/h3>\n\n\n\n<p>CGTMSE is a joint initiative of SIDBI and\nMSME ministry. The scheme ensures the availability of collateral-free credit\nfor micro and small industries operating pan India. Access to the said scheme\nis available to existing and new entities that belong to the MSME sector.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Interest Subvention Scheme<\/h3>\n\n\n\n<p>This RBI-driven scheme focuses on\ndeducting interest rates over the new and incremental term loan acquired by\nMSMEs. As per Interest Subvention Scheme, the relaxation of 2 percent shall be\nprovided to all MSMEs over the said loans.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Credit Linked Capital Subsidy Scheme (CLCSS) <\/h3>\n\n\n\n<p>The government introduced CLCSS two\ndecades back to facilitate Technology Up-gradation to Micro &amp; Small\nEnterprises. The scheme seeks to render technology up-gradation to SSI units in\na particular product category via induction of robust and advanced technologies\nfor which the government extends capital subsidy.<\/p>\n\n\n\n<p>NABARD, a government institution, is\nassigned as a frontline nodal agency under the scheme for channelizing subsidy\nvia Commercial Banks, RRBs, and Cooperative Banks. <\/p>\n\n\n\n<p><strong><em>The GOI has also rolled out various\npolicies to boost the MSME sector in India. Key policies include<\/em><\/strong>:<\/p>\n\n\n\n<ul>\n<li>SAMBHAV,\na national-level awareness initiative to incentivize economic growth<\/li>\n\n\n\n<li>Collateral-free\nloans up to Rs. 3,00,000 crore for the MSME sector to procure raw materials,\nfulfill operational liabilities &amp; restart business<\/li>\n\n\n\n<li>Empowering\nMSMEs to retain more business opportunities by mitigating unfair competition\nfrom overseas players. Given this, the finance ministry has disallowed foreign\nplayers to participate in government procurement tenders worth up to Rs 200\ncrores.<\/li>\n\n\n\n<li>Enabling\nMSMEs to maintain consistency within the production and entire supply chain by\npenalizing public sector units failing to clear MSMEs dues within 45 days\ntimeline<\/li>\n\n\n\n<li>The\nGOI has also rolled out various campaigns such as Startup India, Skill India,\nMade in India, and Digital India to promote the sector&#8217;s growth and improve\nproductivity.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Role_of_Digitalization_in_the_growth_of_MSME_sector\"><\/span>Role of Digitalization in the growth of MSME sector&nbsp; <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul>\n<li>The\nMSME sector has witnessed remarkable development over the past few decades,\ndespite the lack of advanced technologies. <\/li>\n\n\n\n<li>It\nhas capabilities to scale up through smart use of technology and deployment of\ne-marketplace and digitalization in manufacturing processes. GOI has taken an\narray of measures in this regard. These include;<\/li>\n\n\n\n<li>The\nMSME ministry has outlined a plan to digitize the overall administration system\nto make it more effective, secure, and result-oriented.<\/li>\n\n\n\n<li>The ministry has invested Rs 200 crores in setting up 20 tech facilities and Rs 20 crores for 100 extension centers.<\/li>\n\n\n\n<li>The\nsector has witnessed a sharp spike in growth owing to increased internet\npenetration and consumers&#8217; inclination towards digital payments, supported by\nB2C e-commerce players.<\/li>\n\n\n\n<li>MSMEs\nare establishing strategic collaboration with Fintechs to access hassle-free\nfinancing.<\/li>\n\n\n\n<li>Digitalization\nshall instill transparency across the supply chain &amp; enable MSMEs to scale\nup operations.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>India is most likely to become a 5\ntrillion Economy by FY 2025, and MSMEs shall play a pivotal role in this\nregard. To attain this monumental figure, the MSME sector must have an adequate\nand consistent backup of funds and resources. Needless to say, the government\nhas to play a vital role in this regard by providing necessary aid and scheme\nto this sector. <\/p>\n\n\n\n<p>The government is making a constant\nendeavor to incentivize this sector by introducing export-based initiatives and\nother growth-driven schemes. The sector is yet to achieve its full potential despite\nwitnessing consistent growth in the past few years. This slow surging growth is\nmainly attributed to dependence on lackluster technologies, reluctance to boost\nR&amp;D activities, and lack of quality standard certification.<\/p>\n\n\n\n<p>The schemes like &#8216;AatmaNirbhar Bharat&#8217; have witnessed a considerable push towards boosting home-grown industries via an array of measures such as subsidies, incentives, and fiscal aid. The ultimate objective is to improve the manufacturing &amp; export potential of domestic firms so as to put them at the center stage of global supply chains.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our Article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/wbidc-chairman-urges-msmes-to-prioritize-ipr-and-quality-certification\/\">WBIDC chairman urges MSMEs to prioritize IPR and Quality Certification<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>MSME sector is acknowledged as the prominent pillar of the Indian economy owing to their massive contribution to GDP, exports, and job creation. In India, most small and micro enterprises belong to the agro and food sectors. On the contrary, the medium-sized enterprises belong to the pharmaceutical, auto, and chemical sectors. The MSME sector has [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":39455,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[176],"tags":[2083],"acf":{"service_id":"71"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":8357,"readingTime":5,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/39449"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=39449"}],"version-history":[{"count":13,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/39449\/revisions"}],"predecessor-version":[{"id":68129,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/39449\/revisions\/68129"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/39455"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=39449"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=39449"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=39449"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}