Micro, Small, and Medium Enterprises (MSMEs) play a crucial role in the Indian economy, significantly supporting entrepreneurship and providing employment to millions of individuals. The classification of MSMEs in India is as follows:
Data from PIB is showing that in recent years, the sector has exhibited remarkable resilience, with its share of the country’s Gross Value Added (GVA) rising confidently from 27.3% in 2020-21 to 29.6% in 2021-22, and reaching an impressive 30.1% in 2022-23. This trend powerfully underscores the sector’s vital role in driving national economic growth.
Moreover, the sector’s contribution to India’s total exports is on an upward trajectory to 43.59% in 2022-23, then advancing to 45.73% in 2023-24, and hitting 45.79% in 2024-25 (as of May 2024). These figures demonstrate the sector’s deeper integration into global trade and its strong potential to elevate India’s status as a leading manufacturing and export hub.
Almost 90% of businesses worldwide are classified as Micro, Small, and Medium Enterprises (MSMEs). In India, MSMEs contribute to approximately 45% of the country’s industrial production. These enterprises are characterised by their innovative capabilities, allowing them to operate within budget constraints and provide cost-effective solutions to the communities they serve.
As per data from PIB, Exports from MSMEs have grown significantly, rising from ₹3.95 lakh crore in 2020-21 to ₹12.39 lakh crore in 2024-25 (up to May’24). The number of exporting MSMEs has also increased from 52,849 to 1,73,350 in the same period.
MSMEs operate across a diverse range of areas, including urban, semi–urban, and rural settings. In regions where large-scale industries are absent, MSMEs contribute to local economies.
Their ability to adapt and be resourceful makes them key players in many sectors, supporting growth and development across the country, such as:
- The handloom and textile industries are among the most significant sectors managed by MSMEs. In India, the textile industry is predominantly driven by micro and small enterprises, which contribute significantly to both textile exports and employment opportunities.
- Handicrafts also represent an important area of focus for MSMEs, playing a vital role in promoting Indian crafts and arts, which are well-regarded worldwide. In various states, government initiatives employ millions of artisans through MSMEs, particularly in regions like Gujarat, West Bengal, and Uttar Pradesh.
- Furthermore, many agricultural activities receive support from these MSMEs through the provision of agricultural technology and cost–effective solutions, helping farmers improve their processes, reduce costs, and enhance productivity. This support fosters the export of agricultural products and strengthens India’s position in the global Agri-market.
- Indian MSMEs (Micro, Small, and Medium Enterprises) play a crucial role in advancing renewable energy projects, such as affordable solar panels and their accessories. They significantly contribute to the installation of rooftop solar panels, which are vital for achieving the country’s clean energy goals. Additionally, these enterprises are instrumental in exporting solar panels to various countries.
- By offering opportunities for both skilled and unskilled labour, from delivery services to IT, MSMEs are strengthening small-scale businesses in India, enhancing their presence in the global business arena.
Challenges Faced by MSMEs:
Despite various initiatives taken by the government, MSMEs (Micro, Small, and Medium Enterprises) in India face numerous challenges.
One significant issue is their struggle to obtain financial support from traditional financial institutions, which limits their ability to invest, grow, and expand.
Additionally, inadequate infrastructure, particularly in rural areas—such as unreliable power supply and poor transportation—hinders the operations of MSMEs.
Frequent changes in regulations and compliance requirements can also lead to delays, consuming valuable time for these enterprises.
Moreover, MSMEs encounter difficulties in accessing both domestic and international markets, facing challenges such as brand recognition, distribution issues, and intense competition.
Gender parity remains a pressing issue within the MSME sector, further complicating their growth and stability.
In this blog, we aim to highlight the importance and impact of Micro, Small, and Medium Enterprises (MSMEs) on the Indian economy, particularly in the area of exports.
MSMEs play a crucial role in various sectors, including manufacturing, technology, textiles, handicrafts, and agriculture. They are thriving across all these domains.
However, to unlock their full potential and enhance India’s export capabilities, it’s essential to address the challenges faced by MSMEs, even after various initiatives have been implemented. By focusing on these challenges, we can significantly strengthen and advance India’s export sector.