Micro, Small, and Medium Enterprises(MSMEs) are the heart of our economy. MSMEs generate employment, innovate new products, and contribute to the growing economy. From local startups to small-scale manufacturers, MSMEs drive industrial growth and strengthen supply chains. This business can play an important role in entrepreneurship and sustaining livelihoods. The government has acknowledged MSMEs are the engine of economic growth and a driver of sustainable development.
Why do people say MSMEs are the backbone of the Economy?
Let's have a look at it.
MSMEs work in many industries, such as manufacturing, services, processing, and the creation and preservation of items. MSMEs are spread in textiles, food processing, construction, technology, and even healthcare. MSMEs are involved in everything.
Do you know how much MSMEs have contributed to the Indian economy?
Let's have a look. In 2020-21 MSMEs contributed 27.3% of India's total GDP and accounted for 49.45% of the country's total exports. In 2021-22 their contribution increased to 29.6% and total exports were 45.03%.
So they are playing a huge role in both the economy and international trade.
Between 2022 and 2024, the contribution from MSMEs showed a positive growth, 30.1% of India's GDP and 43.59% of its total exports in 2022–2023 came from this sector. For 2023-24 MSMEs contribution to the economy is estimated around 31% of GDP and 48% of total exports.
That’s impressive! It shows how vital MSMEs are to India’s economic growth and global trade.
But to understand its significance, the benefits of MSMEs to India are impressive. Let me break it down for you.
Employment:
MSMEs are one of the largest sources of employment in India. It provides jobs to over 7.44 crore people across the country. These enterprises are important for rural and semi-urban areas. Large companies might set up shop in metro cities but MSMEs are more likely to set up in smaller towns. Due to this it can generate employment opportunities and lower their expenses which results in positive growth.
Promoting Entrepreneurship:
Over the past two decades, entrepreneurial activity has been increasing. MSMEs provide the perfect platform for individuals to start their businesses and bring new ideas to life. MSMEs create an environment where individuals can start small businesses, and experiment with new ideas. This eases entry into the market and makes MSMEs a ground for entrepreneurial talent.
Boosting Export and Global Trade:
MSMEs are making a good impact by providing goods and services for domestic and international trade. MSMEs contribute over 45% to 48% to the economy.
It is such a huge chunk! Yes, these numbers are very impressive. But what makes MSMEs so good at exporting?
MSMEs specialize in unique and high-quality products that are in demand worldwide. These businesses export a wide range of products from textiles and handicrafts to machinery and electronics. MSMEs are also in technology and innovation. Many tech startups, which are classified as MSMEs are developing software, applications and selling them globally.
So, with the right support, MSMEs can continue to drive India’s global trade and exports. MSMEs are the heroes of India's export economy.
Regional Development:
Regional development means the efforts to develop a specific region of a country. This provides job opportunities, income generation, demographic trends as well as innovation and creativity within the region.
But How do MSMEs contribute to regional development?
One of the special advantages of MSMEs is that they can promote regional development. MSMEs not only generate jobs they also boost local infrastructure. When a new enterprise is established in the rural sector it tends to bring about the construction of roads, electricity, water supply, and telecommunication to facilitate business activities.
MSMEs tend to be the first source of job and economic activity. MSMEs are the ones who stimulate the local economies by offering employment, improving wages, and boosting demand for local goods and services.
This benefits the general community and enhances the quality of life.
Conclusion:
MSMEs are the heart of India’s economy, driving growth, creating jobs and innovation. Their ability to contribute significantly to both local and global markets makes them essential for sustainable development. MSMEs promote entrepreneurship, boost export, and promote regional development. MSMEs will remain a key pillar of India’s economy.
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