Micro, Small, and Medium Enterprises (MSMEs) are playing a key role in driving India’s economic growth, with their contribution to the country’s GDP expected to increase from 30 per cent to around 40 per cent by 2027. A report by Ugro highlighted that MSMEs will be crucial in helping India achieve its goal of becoming a developed nation by 2047. The formalization of MSMEs through registrations on the UDYAM portal has been identified as a key factor in this growth, allowing small businesses to access government initiatives, financial support, subsidies, and market opportunities more easily.
The report also noted the increasing role of women-led MSMEs, with one in five UDYAM-registered businesses being led by women. Despite representing a smaller share of overall MSMEs, these businesses are contributing significantly to job creation. However, women-led MSMEs are generally smaller in size compared to their counterparts, accounting for only one in ten rupees of investment and turnover. The report emphasized the importance of further empowering and supporting women entrepreneurs in the MSME sector to unlock their full potential.
Despite their significant contribution to the economy, MSMEs still face challenges in accessing commercial credit, with their share accounting for only 6.3 per cent of total commercial credit in FY24. However, this share has shown improvement over the years, indicating growing access to credit for MSMEs. The central government has also taken steps to support the growth of MSMEs, with initiatives aimed at promoting labor-intensive manufacturing, regulatory reforms, technology support, and special initiatives to encourage women entrepreneurs.
The report highlighted the importance of increased adoption of technology and digitalization in formalizing the MSME sector. This trend is expected to provide MSMEs with greater access to credit and markets, further boosting their contribution to India’s GDP. The government’s focus on supporting MSME growth through funding, regulatory reforms, and technology support is expected to drive the sector’s development and help achieve India’s goal of becoming a developed economy by 2047.
In conclusion, MSMEs are set to play a critical role in India’s economic growth, with their contribution to the country’s GDP expected to rise significantly in the coming years. The formalization of MSMEs, particularly through the UDYAM portal, is key to unlocking their potential and enabling them to access government initiatives and market opportunities more effectively. The increasing role of women-led MSMEs further underscores the need to empower and support women entrepreneurs in the sector. With the government’s continued focus on supporting MSME growth, coupled with the adoption of technology and digitalization, the future looks promising for India’s MSME sector and its contribution to the economy.
