MSMEs see positive upsurge in confidence

MSMEs in India are witnessing a strong upturn in business prospects as per recent data. The total number of jobs reported by 46.8 million MSMEs registered under Udyam registration portal reached 201.9 million as of July 4, including 23.2 million jobs from GST-exempted informal micro enterprises, marking a 66% increase from the 121 million jobs reported in July last year.

MSME performance is considered a strong barometer of IndiaThe total employment reported by micro, small, and medium enterprises (MSMEs) registered with the MSME Ministry has exceeded 200 million, based on data from the Udyam registration portal. As of July 4, 46.8 million Udyam-registered MSMEs accounted for 201.9 million jobs, a marked increase of 66% YoY. Out of the total reported jobs, 45.4 million were filled by women employees and 23.2 million jobs were contributed by GST-exempted informal micro enterprises.

Source: Ministry Of Micro, Small & Medium Enterprises

Earlier this year, around 90% of MSMEs expressed confidence that India’s economy will be resilient or further improve in 2024, in a study by Neoinsights. Supported by government initiatives and strong demand, around 91% expect profits to rise in 2024.

Highlighting the surge in MSME jobs reported via the Udyam portal, the Finance Ministry’s monthly economic report earlier this year noted a 5.3-fold increase in employment since the government launched the Udyam portal in July 2020, according to the Department of Economic Affairs (DEA) under the Finance Ministry in its latest monthly economic report.

The DEA emphasized that revising the definition of MSMEs has streamlined business operations, fostering investment and job creation. However, the pace of job creation by Indian small businesses is expected to decelerate this year.

GST is a key contributor towards enhancing MSME registrations and increasing credit flow to them. The increase in MSME registrations is truly impressive, from 5 lakh in FY 2017-18 to 1.5 crore in April-December 2023-24. An RBI report cites a strong increase in credit to MSMEs by 14.1% YoY, led by the rise in collateral free loans. It may be noted that in the Union Budget 2023-24, the government announced the revamping of credit guarantee scheme for MSMEs with a budget of ₹9,000 crore to the corpus. This has enabled additional collateral-free guaranteed credit of ₹2 lakh crore and reduction in the cost of the credit by about 1%. Besides, the limit on ceiling for guarantees has been increased from ₹2 crore to ₹5 crore

Digitisation is also being seen as a major accelerator of business growth for MSMEs. In fact, introducing complete online GST compliance framework has regulated a significant proportion of the previously unorganised sector. According to the MSME Digital Index 2024 by PayNearby, around 68% of MSMEs are recognising the beneficial impact of digital technology in their business. While 31% cite improvement in operational efficiency, 27% report increase in sales and income.