MSMEs are the backbone of India’s economy, playing a pivotal role in driving growth, fostering innovation, and creating employment opportunities. As the sector continues to expand and evolve, MSMEs are increasingly becoming engines of economic progress, contributing significantly to GDP growth and export earnings. Their agility, adaptability, and entrepreneurial spirit make them crucial drivers of inclusive development, particularly in rural and semi-urban areas. In this article we take a look at how the exceptional rise of MSMEs and Foreign Trade Policy coupled by government initiatives is boosting the Indian economy.

In the pursuit of realizing the ‘Viksit Bharat’ (Developed India) vision, the Ministry of Micro, Small and Medium Enterprises (MSMEs) has been instrumental in implementing a plethora of schemes aimed at uplifting the MSME sector nationwide. These initiatives span various domains including formalization, technological assistance, infrastructure development, credit support, sustainable practices, skill development, and market assistance, empowering MSMEs across the country.

Some noteworthy schemes and programs include the Prime Minister’s Employment Generation Programme (PMEGP), MSME Champions Scheme, Credit Guarantee Scheme for Micro and Small Enterprises (CGTMSE), Entrepreneurship Skill Development Programme (ESDP), Micro and Small Enterprises-Cluster Development Programme (MSE-CDP), Procurement and Marketing Support Scheme (PMS), and the National SC/ST Hub (NSSH).

In recent years, the Government has taken significant strides to bolster the MSME sector, evident in various initiatives:

  • Revised MSME Classification Criteria: The revision of classification criteria aimed at promoting investment and facilitating ease of doing business.
  • Introduction of Udyam Registration: The implementation of the “Udyam Registration” initiative from July 1, 2020, streamlined processes for MSMEs, enhancing the ease of doing business.
  • Launch of Udyam Assist Platform (UAP): The UAP, inaugurated on January 11, 2023, brought informal Micro Enterprises (IMEs) under the formal ambit, enabling them to avail benefits under Priority Sector Lending (PSL).
  • RAMP Program: The Raising and Accelerating MSME Performance (RAMP) program, with a budget allocation of Rs. 6,000 crore over 5 years, aims to uplift MSMEs and enhance their competitiveness.
  • MSME Champions Scheme: Launched to modernize manufacturing processes, reduce wastages, encourage innovation, and facilitate national and global outreach and excellence.
  • Expansion of Technology Centers: The expansion of the Technology Center network across the country under the ‘Technology Centre Systems Programme’ and establishment of new Technology Centers/Extension Centres to provide technology support and high-end skilling to MSMEs.
  • Introduction of Online Portal “Champions”: The launch of the “Champions” portal in June 2020 streamlined e-governance processes, grievance redressal, and provided handholding support to MSMEs.

Foreign Trade Policy

These initiatives have not only revitalized the MSME sector but have also significantly contributed to India’s economic landscape. According to data from the Ministry of Statistics and Programme Implementation, the MSME Gross Value Added (GVA) as a percentage of All India Gross Domestic Product (GDP) has witnessed steady growth over the years, reflecting the sector’s increasing significance. Similarly, the share of MSME-related product exports in All India Exports has been substantial, further underlining the sector’s contribution to India’s global trade.

According to data from the Ministry of Statistics and Programme Implementation, the contribution of MSME Gross Value Added (GVA) to India’s Gross Domestic Product (GDP) is as follows:

Year Share of MSME GVA in All India GDP (in %)
2017-18 29.69%
2018-19 30.48%
2019-20 30.50%
2020-21 27.24%
2021-22 29.15%

Based on data extracted from the Data Dissemination Portal of the Directorate General of Commercial Intelligence and Statistics (DGCIS), the proportion of MSME-related product exports in India’s overall exports over the past five years is as follows:

Foreign Trade Policy

Year Share of MSME related Product exports in All India Exports (in %)
2019-20 49.77%
2020-21 49.35%
2021-22 45.03%
2022-23 43.59%
2023-24 (Up to November, 2023) 45.83%

Moreover, the focus on indigenous manufacturing, particularly in the mobile phone sector, has yielded remarkable results. With the emergence of MSMEs in mobile phone manufacturing, India has witnessed a substantial reduction in import dependence, showcasing the sector’s resilience and potential. Although challenges remain, including the import dependency on core components, initiatives like the ‘Make in India’ campaign have set the stage for a self-reliant and robust manufacturing ecosystem.

In conclusion, the concerted efforts of the Government, coupled with the resilience and dynamism of MSMEs, have positioned the sector as a key driver of economic growth and employment generation. As India continues its journey towards self-reliance and global competitiveness, nurturing and empowering MSMEs will remain paramount in achieving inclusive and sustainable development.