New Delhi: The contribution of Micro, Small, and Medium Enterprises (MSMEs) to India's Gross Domestic Product (GDP) is poised for significant growth in the forthcoming years.
A report by Ugro indicates that the proportion of MSMEs within the nation's GDP stands at approximately 30 percent presently, with projections suggesting an increase to around 40 percent by the year 2027.
Furthermore, the report underscores the pivotal role MSMEs are expected to play in India's journey towards becoming a "developed nation," or "Viksit Bharat," by the year 2047.
"From the fiscal years 2018 to 2022, the GDP contribution of MSMEs has fluctuated between 29 percent to 30 percent. By 2027, it is anticipated that MSMEs will elevate their GDP contribution to 35-40 percent, a significant increase from the current estimate of approximately 30 percent," the report states.
It is emphasized that the unlocking of MSMEs' potential is essential for India to realize its ambition of becoming a "Viksit Bharat" (a developed economy) by 2047.
The report highlights that the rapid formalization of MSMEs, facilitated by their registration on the Unified Digital Yojana (UDYAM) portal, is a key driver of this anticipated growth. Launched in the fiscal year 2021, the portal has witnessed a substantial increase in registrations each year, with a near doubling in the process.
This formalization process has been instrumental in enabling small businesses to access government initiatives more effectively, including financial support, subsidies, and enhanced market opportunities.
Additionally, the report notes the burgeoning role of women-led MSMEs, which are increasingly registering on the UDAYAM portal, despite constituting a smaller segment of the overall MSMEs.
"Presently, one in five UDAYAM-registered MSMEs is led by women, and these enterprises are responsible for contributing to one in five jobs generated by MSMEs, despite their lower investment and turnover," the report concludes.
Nevertheless, the report delineated that, on the whole, enterprises led by women in the Micro, Small, and Medium Enterprises (MSME) sector tend to be of a smaller scale compared to their male-led counterparts, contributing to only one-tenth of the total investment and turnover.
The document highlighted that, notwithstanding the significant contribution of MSMEs to the economic landscape, their proportion in commercial credit remains modest. In the fiscal year 2024, this proportion stood at approximately 6.3 percent of the total commercial credit.
Nonetheless, the report also observed an improvement in this figure, with a 60 basis point increase from the fiscal year 2019 to 2024, suggesting an enhancement in the accessibility of credit for MSMEs.
Furthermore, the central government has reaffirmed its dedication to fostering the expansion of MSMEs. In the Union Budget for the fiscal year 2024-25, the government unveiled an extensive package designed to bolster labor-intensive manufacturing and the development of MSMEs. This package encompasses financial support, regulatory reforms, technological assistance, and targeted initiatives to promote entrepreneurship among women.
In conclusion, the report posited that the widespread adoption of technology and digitalization will further formalize the MSME sector, thereby facilitating these enterprises with increased access to credit and market opportunities.
