MSMES – THE BACKBONE OF INDIA’S ECONOMY

NEWS:  The Government of India is reviewing problems faced by MSME exporters due to the West Asia (Middle East) conflict.

MSMEs

• MSMEs (Micro, Small and Medium Enterprises)àbusinesses involved in:Manufacturing, Processing, Services
• Classified based on: Investment in plant & machinery, annual turnover

New MSME Classification (Budget 2025-26)

Micro Enterprise

• Investment: ₹2.5 crore
• Turnover: ₹10 crore

Small Enterprise

• Investment: ₹25 crore
• Turnover: ₹100 crore

Medium Enterprise

• Investment: ₹125 crore
• Turnover: ₹500 crore

Importance of MSMEs in Indian Economy

Contribution to GDP & Manufacturing

• ~30% of GDP
• ~35% of manufacturing output
• Provide inputs to large industries

Employment Generation (VERY IMPORTANT)

• Contribute ~62% of employment
• Major source of: Non-farm jobs, Jobs for women, youth, informal workers

Export Contribution

• ~45.73% of India’s exports (2023-24)
• Key sectors: Textiles, leather, pharma, engineering goods

Inclusive Growth

• Promote: Regional balance, Women entrepreneurship, Social mobility

Linkages in Economy

• Connect: Agriculture + Industry + Services
• Strengthen industrial clusters

Government Schemes Supporting MSMEs

• PM Mudra Yojana
• PM Vishwakarma
• Stand-Up India
• PM SVANidhi
• CGTMSE (Credit Guarantee Scheme)
• PMFME (Food Processing)
• Self-Reliant India Fund

Measures to Strengthen MSMEs

Improve Credit Access

• Shift to: Cash-flow based lending
• Use: GST + Udyam data

Ensure Timely Payments

• Strong enforcement via: MSME Samadhaan portal

Simplify Compliance

• Single-window system
• Reduce inspections
• Decriminalise minor offences

Technology UpgradationàPromote: Industry 4.0, Shared R&D centres

• Skill Development
• Strengthen: Apprenticeships, Industry-ITI linkages

Market Expansion: Platforms: GeM, ONDC

Export Promotionà Support: ESG compliance, Export finance

Conclusion

• MSMEs are crucial for: GDP growth, Employment, Exports
• Key for Viksit Bharat 2047
• Need: Credit + Technology + Policy support