MSMEs and their economic footprint in India's journey to Viksit Bharat

With a vast network of over 74 million registered businesses, the Indian MSME sector makes a substantial contribution to the growth of the country's economy

The micro, small and medium enterprises (MSMEs) sector is recognised as a crucial contributor to the socio-economic development of economies. The sector has become increasingly significant for its role in generating employment, enhancing exports, promoting industrialisation, reducing regional imbalances, and ensuring equitable income distribution. MSMEs are vital for propelling significant transitions in economies and communities. 

According to the World Bank, MSMEs account for around 90 per cent of formal businesses and nearly 50 per cent of global employment, a trend mirrored across various emerging economies. These enterprises are engines of job creation, innovation, and inclusive growth. They play a critical role in poverty reduction, bridge regional disparities, and serve as vital links in domestic and global value chains as suppliers, distributors, and service providers. Beyond their economic footprint, MSMEs are increasingly at the forefront of creativity and problem-solving, particularly in digital technologies and green solutions. 

With a vast network of over 74 million registered businesses, including 29 million women-led enterprises, generating employment for more than 320 million, the Indian MSME sector makes a substantial contribution to the growth of the country’s economy. It contributes significantly to India’s total exports, helping position the nation as a centre for global manufacturing. MSMEs, the backbone of emerging economies, act as a catalyst for driving growth and development. 

With a vowed commitment to enhance ease of doing business and facilitate a pro-business environment, India has taken a strategic approach to bolster the MSME sector, while recognising its capacity as one of the key engines — alongside agriculture, investment, and exports — for India’s economic development and growth.  

To enhance the efficacy and inclusion of a large number of enterprises, investment and turnover limits have been raised, and a multi-pronged approach towards the holistic development of MSMEs has been adopted. 

India’s flagship MSME schemes span digital enablement, credit support and skill development, as well as global market access and the empowerment of traditional artisans. These include the Prime Minister’s Employment Generation Programme, which assists prospective entrepreneurs in setting up new non-farm micro enterprises; the PM Vishwakarma Scheme, aimed at empowering traditional artisans and craftspeople through skill training, financial assistance and access to modern tools; and the Raising and Accelerating MSME Performance (RAMP) programme, which aims to improve MSMEs’ access to markets, finance and technology upgradation by enhancing the outreach of existing schemes, fostering innovation, promoting green initiatives, and scaling up guarantees for women-owned micro and small enterprises.  These provide valuable policy insights for other emerging economies hoping to leverage such opportunities and grappling with similar challenges. 

To address financing gaps and enhance financial inclusion in the MSME sector, the Government of India has introduced several key measures. These include financial support for first-time entrepreneurs; the Credit Guarantee Fund Trust for Micro and Small Enterprises, which provides credit guarantees to MSEs for loans extended to them without needing collateral security or third-party guarantees; the Self-Reliant India Fund to infuse equity into MSMEs that have the potential and viability to scale up into large enterprises; and the Trade Receivables Discounting System, a Reserve Bank of India-regulated platform that allows MSMEs to transform their trade receivables into cash via invoice discounting. In addition, the Stand-Up India scheme offers loans of up to Rs 1 crore to women and entrepreneurs from marginalised communities for setting up greenfield enterprises. These initiatives have been envisioned for MSMEs to contribute to India’s mission of Viksit Bharat by 2047, and make it a $30 trillion economy. 

India’s domestic experience in nurturing MSMEs through formalisation, improved access to finance, technology development, digital connectivity, skilling, cluster development, and market integration has enabled its MSME sector to become increasingly globally competitive, while amplifying its role in driving inclusive and sustainable development. Further, encouraging women’s entrepreneurship serves as a significant catalyst in accelerating India’s progress towards achieving its vision of Viksit Bharat. In this context, the government is committed to providing enhanced and effective access to supportive programmes for women entrepreneurs, thereby reshaping the entrepreneurial landscape to be more formal, diverse and growth-oriented. 

With a focused formalisation drive, India was able to register and provide a formal identity to more than 70 million MSMEs spanning a myriad sectors across manufacturing, services and traditional crafts. Indian MSMEs embody scale, diversity and competitiveness in the global marketplace. The Ministry of MSME, through its Udyam Registration and Udyam Assist Platform, brought informal micro enterprises into the formal ambit, and availed of priority-sector lending benefits.  

Indian MSMEs are increasingly integrating into global supply chains, contributing with upgraded technology, quality standards, and digital capabilities, which is positioning them as reliable trading partners. Indian MSMEs benefit from targeted government schemes such as the ZED certification, which promotes zero-defect and zero-effect manufacturing through graded certification levels and financial assistance. They are also supported by the MSE GIFT (Green Investment and Financing for Transformation) and MSE SPICE (Scheme for Promotion and Investment in Circular Economy) initiatives under the Ministry of MSME’s RAMP programme, which focus on green technologies and circular economy projects across India. This improves resource efficiency and increases the competitiveness of MSEs by supporting projects based on reuse, recycling, and circular production models. 

Further, the memoranda of understanding and free trade agreements with different countries empower Indian MSMEs to become globally competitive through cost-effective technological upgrades. The government has established several technology centres to boost the operational efficiency of MSMEs through access to cutting-edge equipment, training, and support services. 

Initiatives such as the Micro and Small Enterprises Cluster Development Programme provide funding for infrastructural and common facility centres, thereby enhancing productivity and strengthening the global value chain in the MSME sector. Through Advanced Training Institutes and the Entrepreneurship Skill Development Programme, the government prioritises capacity building with a vision to support technological adoption, skilling, and innovation among MSMEs.    

By championing institutional reforms, practical cooperation, and technology-enabled solutions, MSMEs, through joint collaboration, will reinforce cooperation and stimulate economic development through global supply chains, and support economic development. That same vision is now set to extend into India’s Brics presidency in 2026, with a focus on resilience, technology, innovation, cooperation, and sustainability in the MSME sector. 

Under the leadership of Prime Minister Narendra Modi and guided by the foundational principle of ‘Sabka Saath, Sabka Vikas, Sabka Vishwas, Sabka Prayas’, the MSME sector has emerged as a powerful engine of economic and social transformation. Through sustained policy reforms and targeted interventions, MSMEs have delivered significant gains in entrepreneurship promotion, employment generation, and innovation-led growth, contributing meaningfully to grassroots economic empowerment. 

As India moves decisively towards the goal of Viksit Bharat by 2047, the MSME sector continues to reinforce national priorities by enhancing efficiency and productivity, expanding market reach, and leveraging technology and digital platforms.

 

The writer is Union minister of state for Micro, Small and Medium Enterprises, and Labour and Employment