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Nurturing the Backbone – MSMEs Driving India’s Socio-Economic Engine

Empowering the Heart of the Economy

The Micro, Small, and Medium Enterprises (MSMEs) sector stands as a cornerstone in India’s journey of socio-economic development. Its pivotal role in contributing to the Gross Domestic Product (GDP) and fostering entrepreneurship in semi-urban and rural areas cannot be overstated.

A Paradigm Shift: Revised MSME Definition

Under the Aatmnirbhar Bharat Abhiyaan Scheme, a monumental revision in the MSME definition was announced on May 13, 2020. Effective from July 1, 2020, this recalibration bases the classification on investment criteria and turnover, aligning with the evolving economic landscape.

BSE SME Platform: A Beacon for SMEs

Forecasts indicate that over 60 SMEs are expected to join the BSE SME platform in the fiscal year 2021-22, channeling equity funds for their business needs. This comes on the heels of 16 SMEs making their mark in 2020, raising Rs. 100 crore (US$ 13.74 million). The collaboration between the Bombay Stock Exchange (BSE) and the Electronics and Computer Software Export Promotion Council (ESC) underlines the commitment to promote awareness among small businesses about the advantages of listing.

Digital Transformation and E-commerce Drive

The integration of MSMEs with e-commerce platforms, especially through the Government e-Marketplace (GeM), has become a focal point. This government-owned platform serves as a conduit for Ministries and Public Sector Undertakings (PSUs) to procure from MSMEs, bolstering their market presence.

Udyam Registration: A Surge in Numbers

As of December 14, 2023, the Udyam Registration portal boasts a registration count of 21,516,394 MSMEs, marking a significant shift from the previous Udyog Aadhaar Memorandum (UAM) filing process. Micro-enterprises lead the pack with 96.74% of registrations, followed by small enterprises at 2.69% and mid-sized enterprises at 0.25%.

GeM Portal: A Hub of Transactions

The Government e-Marketplace (GeM) has emerged as a powerhouse, processing 12.28 million orders worth Rs. 334,933 crores (US$ 40.97 billion) as of November 2022. With 5.44 million registered sellers and service providers catering to 62,247 buyer organizations, GeM continues to be a catalyst for MSMEs in the procurement ecosystem.

State-wise Udyam Registrations: Maharashtra Leads

Under the new Udyam registrations, Maharashtra leads the way with 37.12 lakh units, followed by Tamil Nadu, Uttar Pradesh, Gujarat, and Rajasthan. This geographical distribution signifies the widespread reach and impact of MSMEs across the nation.

Funding and Support: A Transformative Surge

The number of MSMEs in India is anticipated to grow from 6.3 crore to approximately 7.5 crore, with a projected Compound Annual Growth Rate (CAGR) of 2.5%. The Ministry of MSME’s expenditure surged to Rs. 23,583.90 crore (US$ 2.84 billion) in FY23, reflecting a remarkable 260% increase from FY19.

Digital Payments Revolutionizing MSMEs

Indian MSMEs are embracing digital payments, with 72% of transactions conducted digitally. This shift, accounting for 9,192 crore transactions worth Rs. 2,050 trillion (US$ 24.73 trillion) by December 31, 2022, opens new growth avenues for the sector.

Statutory Bodies and Government Policies: Pillars of Support

Statutory bodies like KVIC, Coir Board, NSIC, NI-MSME, and MGIRI play crucial roles in promoting and developing MSMEs. Government policies, such as the Credit Guarantee Trust Fund, Pradhan Mantri Mudra Yojana, and various credit schemes, underline the commitment to fostering MSME growth.

Recent Developments: Charting a Resilient Path

Recent collaborations, initiatives, and partnerships, including Google’s investment plans, the TDB-SIDBI MoU, and the RBI’s Public Tech Platform for Frictionless Credit, showcase the continuous evolution and adaptability of the MSME sector.

Achievements and Road Ahead: Toward a Vibrant Future

MSMEs have achieved significant milestones, supported by various schemes and policies. As the sector looks to the future, the government’s commitment to doubling the Indian economy to US$ 5 trillion presents an exciting prospect. However, investments in technology, research and development, and back-end services are imperative to unlock the true potential of MSMEs.

In conclusion, the MSME sector remains a driving force behind India’s economic growth. Nurturing and fortifying this vital segment will not only contribute to achieving economic milestones but will also ensure a robust and inclusive development trajectory for the nation.

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