The Role and Growth of MSMEs in India
Micro, small, and medium enterprises (MSMEs) are pivotal to the Indian economy's structure and development. Their contribution to the gross domestic product (GDP) has witnessed significant growth. Key statistics include:
- The share of gross value added (GVA) by MSMEs in GDP increased from 27.3% in 2020-21 to 30.1% in 2022-23.
- MSMEs' exports surged from about ₹4 trillion in 2020-21 to ₹12.39 trillion projected for 2024-25.
Support and Initiatives for MSMEs
To bolster MSMEs' growth, they require a supportive environment and policy framework. One recent initiative is:
- The launch of Digital Excellence for Growth and Enterprise (Dx-EDGE) by the Confederation of Indian Industry, NITI Frontier Tech Hub, and the All India Council for Technical Education. This platform aims to equip MSMEs with competitive technological tools and knowledge.
Challenges Facing MSMEs
Despite their importance, MSMEs face several challenges:
- The scarcity of medium-sized companies essential for driving economic growth.
- Difficulty in scaling up businesses due to the regulatory environment and legal/political risks, leading to operational inefficiencies.
- Increased contractualisation of labour due to regulatory constraints, affecting manufacturing GVA.
Policy and Regulatory Environment
Addressing the issues of MSMEs involves tackling legal and operational challenges at various levels:
- The introduction and pending implementation of new labour codes to reform existing labour laws.
- Highlighted issues under the goods and services tax regime as reported by the Public Accounts Committee of Parliament.
Future Directions
Prime Minister has proposed the establishment of a deregulation commission to eliminate obsolete regulations. Given the current global economic climate, the focus should be on removing regulatory barriers to enable Indian businesses to thrive and compete effectively.
