Half a percent and 30% – India’s MSME story

Half a percent and 30% – India’s MSME story

Published on : September 10, 2020

The Union Budget typically spends less than half a percent on MSMEs annually even though India’s 6 Crore Micro, Small and Medium Enterprises contribute close to 30% to India’s GDP! With more than 11 Crore jobs, MSMEs are second to only agriculture in terms of employment. Here is a quick glance at the sector:

The MSME story is dominated by micro enterprises. When a micro enterprise scales to become a medium enterprise, it generates 20x employment. But the reality is that most enterprises in India tend to remain micro in size and scale.

Women constitute about 20% of the owners and 24% of the MSME workforce. MSMEs also constitute about 50% of our exports. The economic contribution of MSMEs is significant.

What can help the sector grow? Capital and credit constraint is a challenge. While the total outstanding gross credit increased by 180% from 2010 to 2019, outstanding credit by MSMEs increased by 130% during the same period.

The other challenge has been formalising the sector so that MSMEs can be understood better and served better by various schemes and assistance that the Government offers them. To ease the process, the government of India has announced the launch of Udyam Registration portal effective July 1st, 2020 (https://udyamregistration.gov.in/UdyamRegistration.aspx). The announcement says:
  • All existing enterprises registered under EM–Part-II or UAM shall register again on the Udyam Registration portal on or after the 1st day of July, 2020.
  • All enterprises registered till 30th June, 2020, shall be reclassified in accordance with this notification. The existing enterprises registered prior to 30th June,2020, shall continue to be valid only for a period up to the 31st day of March, 2021.
  • An enterprise registered with any other organisation under the Ministry of Micro, Small and Medium Enterprises shall register itself under Udyam Registration.
Additionally, the definitions for classification of enterprises has been updated:

Will the MSME sector pick up pace and accelerate its growth with all the new measures and stimulus announced by the government?

Our detailed MSME report with 60+ reusable graphs is here : https://www.indiadatainsights.com/product/msmes-in-india/

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