Redefining MSMEs: Fuelling growth, innovation & global expansion

The MSME sector is a vital pillar of India’s economy, driving GDP growth, employment, and exports. Its GDP contribution increased from 29.7% in 2017-18 to 30.1% in 2022-23, while exports surged from ₹3.95 lakh crore in 2020-21 to ₹12.39 lakh crore in 2024-25. The Government of India has launched various initiatives to strengthen MSMEs, including schemes like MSME Champions, RAMP, and Udyam Registration. These efforts encompass financial support, infrastructure development, ease of doing business reforms, procurement policies, and enhancing market integration, thereby facilitating integration of Indian MSMEs into global supply chain.

The Micro, Small, and Medium Enterprises (MSME) sector has evolved into a dynamic and vital force in the Indian economy. It plays a crucial role in generating employment at a lower capital cost than large industries while also fostering industrialization in rural and backward areas. This, in turn, helps reduce regional disparities and ensures a more equitable distribution of income and wealth. Additionally, MSMEs complement large industries as ancillary units and make a significant contribution to the country’s socio-economic development.

The MSME sector has been making a significant contribution to India’s GDP over the years. The Gross Value Added (GVA) by MSMEs stood at 29.7% in 2017-18, rising to 30.1% in 2022-23. Despite the challenges posed by the COVID-19 pandemic, the sector maintained a contribution of 27.3% in 2020-21 before rebounding to 29.6% in 2021-22. This highlights the sector’s vital role in fostering economic growth and stability, reaffirming its enduring strength and importance to the Indian economy.

Micro, Small, and Medium Enterprises (MSMEs) have seen a remarkable surge in exports, rising from ₹3.95 lakh crore in 2020-21 to ₹12.39 lakh crore in 2024-25, emphasizing their crucial role in driving India’s economy and enhancing global trade. The number of exporting MSMEs has also grown significantly, increasing from 52,849 in 2020-21 to 1,73,350 in 2024-25. Demonstrating a strong growth trajectory, MSMEs contributed 45.73% to exports in 2023-24, which further rose to 45.79% by May 2024, underscoring their expanding influence on India’s trade performance.

Government support to MSMEs

MSMEs are one of the four key drivers of the country’s development, alongside Agriculture, Investment, and Exports. Often regarded as the backbone of the economy, the MSME sector plays a crucial role in India’s economic growth. To support entrepreneurs and integrate Indian MSMEs into the global supply chain, the Ministry of MSME has introduced various schemes and programs.

To boost the competitiveness of Indian industries, including MSMEs, and expand their participation in global value chains, the Government of India has introduced several initiatives, including Make in India Programme, Promotion of Ease of Doing Business, improved availability of credit through MUDRA, and Stand up India. 

In addition, the Ministry of MSME has specifically established 60 Export Facilitation Centers (EFCs) across the country to provide requisite mentoring and handholding support to Micro and Small Enterprises (MSEs). Under International Cooperation Scheme, financial assistance is provided to MSMEs for entering export market by facilitating their participation in international exhibitions/fairs held abroad and reimbursement of various costs involved in export of goods and services. 

Furthermore, the Ministry of MSME is also providing assistance through various schemes, including-

• MSME Champions Scheme, 
• Raising and Accelerating MSME Performance (RAMP) Scheme, 
• Credit linked Capital Subsidy Technology Upgradation Scheme(CLCS-TUS), 
• Micro & Small Enterprises- Cluster Development Programme(MSE-CDP), 
• Technology Centre System Programme (TCSP), 
• Procurement and Marketing Schemes (PMS).

To attract more FDI, the Government has put in place an investor friendly FDI policy, wherein most of the sectors, except certain strategically important sectors, are open for 100% FDI under the automatic route.

To enhance infrastructure and reduce logistics costs, the government launched the PM GatiShakti National Master Plan (NMP) on October 13, 2021. This was followed by the introduction of the National Logistics Policy (NLP) in September 2022. While the PM GatiShakti NMP focuses on developing integrated infrastructure, the NLP improves service efficiency through its Comprehensive Logistics Action Plan (CLAP), addressing processes, digital systems, regulatory frameworks, and human resources. These initiatives create a data-driven decision support system, streamlining the logistics ecosystem to lower costs and enhance overall efficiency across the country.

Additionally, the ‘PM Vishwakarma’ scheme’, was announced by the Government of India in the 2023-24 Budget and launched on September 17, 2023. The scheme aims to enhance the quality and reach of products and services by artisans and craftspeople, integrating them into domestic and global value chains.

The Department for Promotion of Industry and Internal Trade (DPIIT) serves as the nodal agency overseeing Ease of Doing Business (EoDB) initiatives, aimed at fostering a business-friendly environment across all sectors, including Micro, Small, and Medium Enterprises (MSMEs). DPIIT leads key initiatives such as the Business Reform Action Plan (BRAP), the B-Ready assessment, Jan Vishwas, and efforts to reduce compliance burdens for businesses and citizens. These initiatives streamline regulations, attract investments, and drive economic growth by minimizing bureaucratic obstacles. 

To further support MSMEs, the Ministry of MSME has introduced the Udyam Registration Portal and Udyam Assist Platform, facilitating their registration and ease of operations. (The Udyam Registration Portal offers a free, paperless, and self-declaration-based registration  process, eliminating the need for document uploads, thus simplifying the formalization of businesses. As of February 4, 2025, the Udyam Portal records an impressive total of 5,93,38,604 registered MSMEs, with the majority being micro-enterprises.)

The new budgetary provisions, under the Union Budget 2025-26, build upon this strong foundation by promoting innovation, boosting competitiveness, and improving access to resources. The Union Budget introduces a series of measures aimed at strengthening the MSME sector by enhancing credit access, supporting first-time entrepreneurs, and promoting labour intensive industries.    

To help MSMEs scale operations and access better resources, the investment and turnover limits for classification have been increased by 2.5 times and 2 times, respectively. This is expected to improve efficiency, technological adoption, and employment generation.