India has a prominent role of fair amount of businesses that are responsible
for the contribution of MSME in Indian economy . In a developing economy
like India, it is very important to put focus on small scale industries for
generating employment and bringing in more businesses activities that
involve the people from the rural parts of the country. India has
predominantly been an agricultural based economy. It has been
observed in the last two decades, India has slowly been grinding in
terms of its technological development activities and as a result of
which many new technology based businesses are starting to establish
themselves in each and every part of the country. It has become
hard to argue that MSME is shaping future of India’s economy.
The MSME sector is responsible for the increase in the amount of
exports that India is currently handling. There is a huge demand for
Indian products in the international market and as a result of which
MSMEs are gearing up to the best of their capabilities to suffice the
growing demands for goods and services. There are many established
traditional businesses in India that are giving tough competition to the
businesses from the MSME sector. The amount of innovation that the
MSME sector is providing seems to be overwhelming at times. Many
new entrants are constantly exploring the route of the MSMEs at the
start of their entrepreneurship journey.
The role of MSME in Indian economy has simply become important
due to the fact that many provisions have been made by the Ministry
of MSMEs for the further development and welfare of this sector. The
Ministry closely monitors all the activities that are happening within
the MSME sector and also keeps a tab on the current trends that are
shaping the market in a particular way. The contribution of MSME in
Indian economy is of paramount importance in today’s time and age.
MSME sector is acknowledged as the prominent pillar of the Indian
economy owing to the MSME 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 been working in coordination with several state
governments, ministries, and stakeholders to boost Indian’s Rural
Economy.
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The MSME contribution to GDP stands at a massive 30%. This amount
of growth is credited to the ever-increasing demand in the domestic as
well as the international markets. The role of MSME in Indian economy
has evolved with the passage of time. Many different industries have
shown clear interest in the efficiency of production and logistics of the
MSMEs. This sector has entirely become the backbone of the entire
Indian economy. India has the second-largest MSMEs globally, after
China. The industry offers various services and produces over 6,000
products, ranging from traditional to high-tech. Thanks to the
government’s ‘Make in India’ initiative and a push to attract more FDI,
the Indian MSME sector is well-positioned for rapid expansion and
integration with critical global value chains.
According to government estimates, the country has 63.05 million
micro industries, 0.33 million small businesses, and 5,000 larger
businesses. Uttar Pradesh has the most estimated MSMEs, accounting
for 14.20 per cent of all MSMEs. West Bengal is second with 14% of the
vote, followed by Tamil Nadu and Maharashtra, both with 8%.
The MSME sector has created ample job opportunities within the country
and is progressing forward to train many different workers from different
sections and helping them become skilled laborers. The Government is
very keen about the skill development process and has established
various technical institutes and tool rooms for the MSME workers to
learn and apply the skills from their respective fields. Many surveys have
been done at the local and at the rural level about the performances of
the MSMEs and the results have been astonishing. When contrasted with
the large entities, MSMEs have played a prominent role in the industrialization
of rural areas without conceding too much capital cost. The sector has
made considerable contributions to the nation’s socio-economic growth
and supported prominent industries. Presently, the MSME sector accounts
for 40 percent of the nation’s overall export and around 30 percent of
GDP from the service sector.
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The problems of MSME in Indian economy increased during pandemic
era. They managed to somehow adapt to the new modes of operation.
A lot of MSME businesses explored the online path of doing business
which became the norm of the day. Some of them succeeded in their
attempt in doing so and are now thriving in terms on business. After
the pandemic many different MSMEs were facing difficulties with free
cash flow within their businesses. There has been a huge amount of
liquidity crisis in the markets due to the recessionary outlook of the
economy. It is with time that the MSMEs are able to identify the key
areas that need improvement and are striving to achieve the same.
The prominent role of MSME in Indian economy is increasing day by
day as more and more players are entering this sector and the level of
competition is also on the rise and due to which many MSMEs that are
trying to use shortcuts to achieve their goals will be obliterated in the
coming years. This is a growing concern for companies that are performing
poorly on their balance sheets. They need to equip themselves with all the
necessities that are required for survival.
Why MSME is important in India ?
The Prominent role MSME industry is vital to India’s economic growth by
boosting the exports and providing employment opportunities. Once a
business registers itself as an MSME, there is a fair chance of them raising
loans from the banks for the operational requirements. The Government
is paying special importance to the MSME sector by bringing innovative
schemes and more businesses are eager to become a part of MSME future
in India.