Growth Opportunities in MSME: Where does India's MSME Sector stand?

The Micro, Small, and Medium Enterprises (MSME) can be considered the economy’s backbone because of their enormous contribution to various employment, production, and export sectors. MSME’s industrial product contribution accounts for 45%, whereas its contribution to exports is 40% of its total export. It plays a crucial role in employment generation as it employs approximately 110 million workers from all over the country. Despite the enormous competitive landscape of the businesses, the MSME sector has never ceased to grow.

Its GDP contribution of approximately 30% delineates that it is one of the country’s key economic growth drivers.

Revised Definition of MSME by the Government

India’s government has always been stimulating the MSME sector with different schemes and initiatives to boost its overall economic growth. This stimulation has increased during the COVID-19 outbreak as the government focuses more on the products’ home manufacturing. The government has redefined MSME under the ‘Atmanirbhar Bharat’ initiative. According to this scheme, MSME will no longer be characterised based on the investment. Rather, it will be classified based on its annual turnover. Some key features of this initiative are as follows -

• Equipping the MSME sector with a Collateral free loan of Rs.3 lakh crore.
• Equity infusion of Rs. 50,000 crore through the fund of funds (MSME).
• A subordinate debt of Rs. 20 crore for MSMEs.
• MSMEs to get a moratorium period of 12 months.
• 100% assured credit guarantee.
• Redefinition of MSME will be beneficial for almost 45 lakh units.

A Glimpse of India’s MSME Sector

• According to the 73rd round, the National Sample Survey MSME sector in India comprises 633.88 lakh units.
• Enormous opportunities for employment at a lower capital cost in MSMEs as compared to large industries.
• According to the National Sample Survey, this sector has created around 11 crore employment opportunities.
• IT initiatives like MyMSME, MSME Sambandh, MSME Samadhan, and Udyog Aadhaar Memorandum are built to support MSMEs for the free flow of information and resolve payment related issues.
• Credit support to MSMEs through the Prime Minister’s Employment Generation Programme, where approximately 1000 crores have been provided to 32,200 micro-units.
• Credit linked capital subsidy scheme where subsidy of Rs.454 crore has been dispersed.
• Credit guarantee trust fund of Rs. 27,192 crore for 4,07,209 MSMEs.
• Various skill development training programs like Entrepreneurship development programs, assistance to training institutions, National Small Industries Corporation, National institute for MSMEs, Mahatma Gandhi Institute for Rural Industrialisation, and technology centres have trained 2,69,005 people and developed their skills for personal and professional development.

The Growth Opportunities of India's MSME Sector

The employment opportunities in MSME has the potential to escalate by over 50% till the next decade. Innumerous benefits and growth opportunities will attract huge participation and registration in the MSME sector.

• As per India’s population, the country should produce 10 to 15 million employment opportunities over the next decade. The current employment status in MSME stands at 28% of the total employment.
• India is proceeding towards a more industrialised economy with sufficient growth in different sectors. All the economic sectors need to perform well to reflect the stability in MSMEs’ growth to achieve holistic growth.
• The manufacturing sector has observed a growth rate of 18%, and the services sector has shown a 34% growth rate in employment.
• The MSME has huge growth potential in the khadi, coir, and village industry.
• 630 lakh micro sector enterprises account for over 99% of the total number of MSMEs, 3.31 lakh small sector and 0.05 lakh medium sector reports for 0.52% and 0.01% of overall MSMEs respectively.

Sector-wise Focus on MSME’s Growth Opportunities

1. Telecommunications:

India is the second-largest market for the telecommunications industry that had a growth rate of 10% in MSME sectors till the year 2020. There are various areas of growth opportunities for MSMEs in telecommunications. The boost in domestic manufacturing due to the ‘Self Reliant Scheme’ will increase telecom networking appliances. The networking equipment will be developed through high-tech methods that will require more skilled employees. Better analytical solutions will enhance the need for advanced data analytics. The huge demand for mobile phones will trigger more low-cost manufacturing of mobile handsets and other devices, opening another door of opportunity for MSMEs in the telecommunication sector.

2. Electronics:

The government’s initiative to develop 500 MSMEs in the electronics sector will create over 2.5 lakh job opportunities. India will soon join the clan of becoming a leader in electronics equipment productions. As the industry moves towards a more functional area, opportunities will open up for the domestic manufacturing of electronic design systems. A National Electronics Mission will be formed to enable MSMEs to grow in this area. Multiple electronic equipment types will be customised for the Indian consumers who will need the MSMEs to create their job chain. The government will also focus on delivering the products required by our army through the products’ domestic manufacturing. The areas of nano-electronics, along with microelectronics, will also contribute to the growth of MSMEs.

3. Healthcare sector:

The tremendous potential of this sector will increase the growth opportunities in MSMEs. This industry is estimated to reach Rs.3 trillion marks by 2022 that will grow at a CAGR of 15%. The changing lifestyle calls for more affordable and user-friendly healthcare services, with the rural areas being the focal point of growth. The low-cost medical facilities need the hour, which can be resolved by better quality medical equipment and labs. India will need to manufacture essentials like surgical gloves, syringes, and other vital equipment required by the healthcare departments at relatively less cost.

4. Food and agriculture:

With the increase in demand for high-quality food, the government has approved over 130 food processing plans during the year 2020. The fast-paced lifestyle is experiencing the need for more processed and ready-to-eat food packages, which indicates the industries to improve the production of such packaged foods. People are now more health-conscious than ever before. Although they need a quick bite of packaged food, they would still prefer healthier items, so healthy food and nutritious drinks and poultry and packaged food products services will be significant growth areas in the MSME sector.

5. Real estate:

This sector has been growing tremendously and has seen a growth rate of 11% until 2020. The key areas with proper growth opportunities are instant property solutions services, residential housing developments, and the demand for talented architects specialising in sustainable housing development. The designers who can create easy yet stylish construction designs have various opportunities for consultants, project managers, hospitality experts, and hotel projects.

There are many other growth areas like aviation, retail, jewellery, education, automotive, biotechnology, transport, hospitality, etc. The growth areas are identified through various studies and researches. The MSMEs will need to adapt to the change and participate more in the government’s skill development programs.

Conclusion

India’s economy is steadily growing, and its growth has remained stable over the last few years. The government’s various schemes have initiated MSMEs’ growth, creating huge employment opportunities for the country. Despite the many challenges that the sector faces, it has successfully evolved over the years. It is now gaining more popularity and support from the people and the government than ever before. The sector has also been recognised globally and is a major driver for poverty alleviation and improved societal lifestyle. The micro, small, and medium enterprises’ extraordinary growth opportunities are the key to the country’s overall development.

Also Read:

1) Ten Benefits that MSME Can Avail
2) MSME – Industries that form a Foundation for a Robust Economy
3) How to register your business under MSME?
4) How to Avail MSME Certificate?
5) How to get your business listed on the Stock Exchange?