UP's targeted intervention for MSMEs could boost industrial output, jobs

Micro, small, and medium enterprises (MSMEs) are a big driver of India’s economic development, generating meaningful employment opportunities at local level. The segment accounts for more than 45 per cent of India’s export value, while the share of MSME in the country’s gross domestic product is around 30 per cent. Just as emphasis is being laid on the development of large-scale industrial clusters, including in high-value sectors like electronics and semiconductors, MSMEs must also be given a conducive environment to grow. In this context, Uttar Pradesh (UP) seems to be making focused interventions. The state is home to the highest number of MSMEs in the country. The recent announcement on developing 15 industrial zones, across 11 districts, exclusively for MSMEs, along with the Yamuna Expressway Industrial Development Authority, earmarking 500 acres for new MSMEs, is a step in the right direction. According to a draft plan prepared by the MSME department, 764.31 acres will be allocated for these industrial estates. 

 

MSMEs contribute almost 60 per cent to UP’s industrial output and account for 46 per cent of its exports. Such units in the state contribute around 14 per cent to India’s MSME count. Flagship initiatives such as the One District One Product (ODOP) scheme have played a role in revitalising traditional and artisanal skills by linking them with modern value chains. The state has also made progress on Geographical Indications (GI). With the highest number of GI tags in the country, UP has leveraged its local produce to carve niche markets. In 2023-24, the manufacturing sector grew by 13 per cent, surpassing the 7.5 per cent growth in UP’s gross state domestic product. Manufacturing now contributes 27 per cent to the state economy at current prices. Importantly, investment is now spread across almost all districts. These developments complement the MSME sector and have helped in building a more balanced industrial base. 

 

However, even as the trajectory appears promising, there remain areas where more sustained attention is needed. One of the most critical gaps lies in the realm of women entrepreneurship. Women-owned MSMEs in UP account for only about 33 per cent of the total in the state. The proportion is lower than in many other states. Targeted skilling, financial access, and women-centric industrial clusters could further boost employment and output. Moreover, UP’s large agrarian economy presents both a challenge and an opportunity. There is untapped potential in agro-processing, food preservation, rural crafts, and farm-equipment manufacturing. For instance, the state’s Food Processing Industrial Policy 2022–27 highlights that only 6 per cent of the state’s 24,000 food-processing units have annual revenues above ₹20 crore, indicating substantial room for scaling up. Strengthening value chains that integrate agriculture with MSMEs can improve farmer incomes and reduce rural distress. It is also vital to ensure that MSME policies are not just about infrastructure and land, but also about reducing compliance burdens, improving credit access, and easing logistics bottlenecks. Prospects of higher industrial output and employment in the largest state will help improve India’s overall growth prospects.