Micro, small, and medium enterprises (MSMEs) constitute a vital component of India’s economic framework, contributing significantly to employment and GDP. However, despite their importance, only a fraction of enterprises are actively engaged in MSME exports, presenting a considerable untapped opportunity.
While the global market for MSME-dominated product categories is substantial, with sectors like garments, leather, toys, and handicrafts exceeding $340 billion, the actual participation of Indian MSMEs in exports remains limited. Identifying bottlenecks and addressing challenges in MSME exports is crucial for unlocking their full potential in accessing global markets.
Government Initiatives and Financial Formalisation
To tackle challenges encountered by MSMEs, the government has initiated various measures. These include formalizing MSMEs through the Udyam portal and providing financial assistance through credit guarantee schemes. These efforts aim to enhance the financial management capabilities of MSMEs and facilitate their participation in exports.
The report highlights E-Commerce exports as a particularly promising avenue for MSMEs to enter the global market. With the potential for exponential growth in this segment, specific modifications in compliance processes tailored to the needs of E-Commerce exports are recommended to facilitate MSME participation.
The report puts forward key recommendations to enhance MSME export capabilities, such as establishing a comprehensive National Trade Network (NTN) to simplify export procedures. It also suggests enabling AI-enabled information provision and relaxing compliance requirements. Additionally, improving access to export finance for MSMEs is highlighted as a crucial step.
Perspectives from NITI Aayog and Future Directions
Dr VK Saraswat, Member of NITI Aayog, underscores the need to streamline export and business processes, emphasizing simplification over digitization. He emphasizes the importance of educating small exporters about the benefits of exports and advocates for collective efforts to boost MSME exports.
Also read: PM Narendra Modi Urges MSMEs to Embrace Global Standards
About NITI Aayog and Foundation for Economic Development
NITI Aayog serves as the premier policy ‘Think Tank’ of the Government of India, providing crucial policy inputs and guidance. Meanwhile, the Foundation for Economic Development (FED) is committed to facilitating sustainable economic growth and works closely with governments to identify high-impact opportunities for economic reform and development across India’s value chain.