Key findings
- MSMEs contribute nearly 30% of GDP, 45% of manufacturing output and 46% of exports in fiscal year 2024.
- By 2047, manufacturing and services sector are projected to employ 67% of workforce and contribute over 75% of GDP.
About MSME sector
- MSMEs are essential to global economy constituting 90% of businesses, and contribute 50% of global GDP.
- Indian MSME sector is projected to grow to $1 Trillion by 2028.
Challenges faced by MSME sector
- Delay in registration: Due to cumbersome registration process, and inefficient single window clearance system.
- Confusion about Government schemes: Lack of awareness and confusion among schemes, and lack of Centre-State coordination.
- E.g. Complex registration under GST, frequent amendments driving up cost of doing business.
- Administrative burden: Due to overlapping documentation for Professional Tax, Contract Labour, Minimum Wages etc. hindering their operations.
- Labour issues: Lack of well-defined trial period for new hires, unskilled workers, variation in wages across states, inefficient training centres etc.
- Finance issues: Limited access to institutional finance, opaque loan application process and lack of collateral etc. hinders their growth.
- Export issues: Inadequate infrastructure, Lack of Environmental, social and governance (ESG) reports by Indian MSMEs impacts exports competitiveness.
Recommendations
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