India aims US$2trn MSME economy by 2024

The 2nd International SME Convention, held by the Ministry of MSME in association with the Economic Diplomacy & States Division of the Ministry of External Affairs and the India SME Forum in June 2019, had seen participation from 1,385 Indian entities as well as 175 entrepreneurs from 44 countries

January 24, 2020

2019 was particularly significant for Indian MSMEs as the year saw 65,312 new micro-enterprises being set up and 522,496 job opportunities created

The Government of India-run e-marketplace platform has expanded the reach of Indian MSMEs with the registration of more than 62,000 enterprises

The Government of India has approved more than 546,000 credit facilities totalling a guarantee of well over US$4.6 billion under the CGTMSE programme

The Government has put special emphasis on intellectual property generation and protection with 60 new IP Facilitation Centres and awareness creation

India’s micro, small and medium enterprises (MSMEs) will play a big role in achieving the target of setting up a US$5-trillion economy by 2024. To enable this, the Government of India has been offering necessary support to grassroots enterprises, and anticipates a contribution of US$2 trillion from the MSME sector in the coming five years.

Herein, the year 2019 was particularly significant for the development of the Indian MSME sector that saw 65,312 new micro-enterprises being set up and 522,496 job opportunities created.

This was accomplished by the steps taken by the Ministry of Micro, Small and Medium Enterprises which during the year enforced measures to usher in technology advancement, skill development, improved financing and market creation for the empowerment of MSMEs. Today, the capabilities of Indian MSMEs span across space and defence technology to food and healthcare. On the back of such enterprises, the nation is likely to emerge as one of the strongest and future-ready economies in the world. 

Policies to aid MSME growth

During 2019, the Government of India provided more than US$268.4 million in subsidies to MSMEs. The Prime Minister’s Employment Generation Programme (PMEGP), aimed at creating self-employment opportunities through the establishment of micro-enterprises in the non-farm sector, led this effort. The government has also commissioned 17 common facility centres (CFC) and 14 infrastructure development projects (IDP) while an additional 24 CFCs and 25 IDPs are on their way. Meanwhile, 51 SFURTI (Scheme of Fund for Regeneration of Traditional Industries) clusters have been set up to drive entrepreneurship. Currently, 78 more SFURTI clusters are being set up that will benefit around 48,608 artisans. The Solar Charkha Mission of the Central Government, aimed at building solar-powered textile clusters in rural areas, has approved 11 detailed project reports (DPRs) during the financial year 2019-20. Apart from operational and infrastructural assistance, the Government of India is also providing financial support through credit programmes. 

Improved MSME financing 

The Government of India has approved more than 546,000 credit facilities totalling a guarantee of well over US$4.6 billion under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) programme. In addition to this, the Government has carried forward the credit-linked capital subsidy component of the Credit Linked Capital Subsidy-Technology Upgradation Scheme (CLCS-TUS), being offered in association with nodal banks. During the current fiscal year, the programme has released over US$47.3 million in financing. The financing assistance is particularly significant amid the growing contribution of the MSME sector to the national economy. MSMEs currently contribute over 49 per cent of the nation’s total exports as well as more than 45 per cent of the total industrial output. The sector, which is largely dominated by unorganized players, reported total procurement worth over US2.5 billion during the first eight months of 2019-20. Offering more than 6,000 different products, Indian MSMEs are now at the core of Indian economy.

Technology to build MSMEs

The Ministry of MSME is implementing Technology Centre Systems Programme (TCSP) at an estimated cost of over US$305 million that will improve innovation and accessibility to the latest technologies for grassroots entrepreneurs through tool rooms and technology development centres. Under the TCSP programme, 15 new technology centres are being set up while 18 existing ones are being upgraded. The centres have already trained close to 360,000 people. The TCSP programme is supported by a US$200 million funding from the World bank. MSMEs are also being allotted digital identities and empowered with tools to make manufacturing leaner and more efficient. The Government has put special emphasis on intellectual property generation and protection with 60 new IP Facilitation Centres. Over 80 design clinics set up by the Government, meanwhile, are helping MSMEs best shape their ideas. Additionally, incubation services with seed capital are being provided to a variety of entrepreneurs. This will give wings to innovative new ideas. 

Global exposure of Indian MSMEs

The Government of India-run e-marketplace platform has expanded the reach of Indian MSMEs with the registration of more than 62,000 enterprises. While Indian MSMEs continue to expand their product and services offerings, the Government’s Zero Defect Zero Effect (ZED) scheme is helping augment the quality of R&D and manufacturing. This comes in addition to around 3,000 programmes conducted or sanctioned this year for entrepreneur skill development. Beyond digital marketing, the Government is establishing avenues to set up physical platforms for procurement and marketing such as trade fairs, exhibitions, seminars, among others. In June 2019, for instance, the Government had organised the 2nd International SME Convention that attracted participation from 1,385 Indian entities as well as 175 entrepreneurs from 44 countries. The Government, in association with Confederation of Indian Industry (CII), had also organised the 16th Global SME Business Summit in September 2019. Such exposures have opened the world to Indian MSME. 

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