MSME Contribution & its Importance in India’s Economy

MSMEs contribute 24.63% and 6.11% to the services GDP and manufacturing GDP of India, respectively. Hence, it is all the more crucial for the government to push this sector towards growth.

MSME loans, from the Ministry of Micro, Small and Medium Enterprises, and several other ministries have played a critical role in the establishment and expansion of these small businesses.   

In May 2020, the government even revised the definition of MSMEs to eliminate the differences between manufacturing and services sector and bring more enterprises under this ambit.

Now, businesses with less than Rs.1 crore of investment will be classified as micro-enterprises. For small enterprises, this ceiling is Rs.10 crore and for medium enterprises, Rs.20 crore.

As for turnover classification, the maximum turnover for micro-enterprises should be less than Rs.5 crore. For small enterprises, it is Rs.50 crore and for medium enterprises, Rs.100 crore.

In addition, the government has provided business loans via several schemes to help MSMEs with financial assistance. Two such schemes are MUDRA loans and Stand-Up India.

It has also eased the process of business registration with the implementation of Udyog Aadhaar.  Plus, it has made the procurement of goods and services provided by MSMEs easy via Government e-Marketplace or GeM.

The Ministry of Micro, Small and Medium Enterprises is also developing policies to push export and minimise imports. All of these efforts combine to represent the government’s unreserved support towards the MSME sector.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.