February 6, 2021
Sound marketing strategies and technology infusion are key to strengthening the rural MSME economy.
65 million MSMEs are expected to be impacted by conducive policymaking.
The ecosystem contributed to 48% of the nation’s exports in 2020, with potential to reach 60% contribution in 2022.
Access to key markets, diversification of export products, financial support and policy granularity will help the sector.
In a statement released today, Union Minister Nitin Gadkari called for policy changes to boost the MSME sector in rural regions and bolster its overall share of the nation’s GDP to 40%. He advocated for a mix of technology adapted to rural requirements in the manufacturing process and sound marketing strategies to strengthen the MSME ecosystem. The Minister remarked “Migration of as much as 30% of the country’s population from rural areas took place since independence due to lack of growth of the village economy. With an aim to modernise the villages, it is time for socio-economic transformation.” As and when the policies are to be implemented, an estimated 65 million MSMEs across the nation are expected to be positively impacted.
The Indian MSME sector, as of July 2020 contributed to 48% of the nation’s exports, which is significant progress from the 8% contribution as of 2015. Union Minister Nitin Gadkari projected that the sector’s share of contribution to India’s exports would rise to 60% by the year 2022. In order to facilitate this progress, it is the need of the hour for the MSME sector to continue having appropriate access to markets both domestic and foreign. KPMG posits that the sector’s current export product mix can be diversified to include food products, fine chemicals and plastics among others.
A greater permeation of institutional financial support for the rural MSME sector is required such that resources can be availed on a timely basis. The COVID-19 pandemic has facilitated a significant uptake of digital technologies by the MSME sector. This reveals that the fintech ecosystem and the NBFC space can step in to provide innovative solutions to aid the sector. From a policy perspective, it is imperative that schemes to benefit the sector be designed to acknowledge the diversity that exists in terms of business sizes and income generation capability.