MSMEs

Context

On the occasion of International MSME Day, Ministry of MSME is celebrating ‘Udyami Bharat-MSME Day’ on 27th June, 2023.

About MSMEs

Micro, Small and Medium enterprises (MSME) account for over 99% of businesses in India. It is the largest employer in India outside of agriculture, employing over 11.1 crore people, or 45% of all workers.
MSMEs are privately owned enterprise with less than ₹50 crore in investments in plant and machinery and turnover below ₹250 crore.
The term MSME itself clubs together a range of businesses as diverse as India itself: from backyard workshops to IT and other technology start-ups with cutting edge technology.

Potential of MSME’s

The potential of India’s small businesses is truly immense. India faces a unique moment in history, a potential demographic dividend of tremendous proportions.
To leverage this opportunity, India needs to create many jobs, especially for the one million young people entering the labour market every month.
The broader benefits of a dynamic MSME sector for the entirety of society includes more jobs, a broader tax base, increased economic growth, prosperous and productive communities, in turn expanding domestic markets for goods and services.

Challenges faced by MSME’s

The disruption of the pandemic severely impacted MSMEs, especially those in the services sector.
Their small size and lack of access to resources meant that many were only beginning to mount a fragile recovery just when renewed war, supply shocks and soaring fuel, food and fertilizer prices presented a host of new threats.
All of this comes against the backdrop of the ongoing climate crisis, the greatest disruption multiplier of all.
Most MSME do not meet today’s standards on productivity, environmental sustainability, and health and safety of workers.
This is further exacerbated by the high degree of informality in the sector, with many enterprises unregistered, and both employers and workers are lacking awareness of and commitment to comply with labour and environmental laws.
As a result, informal enterprises cannot access formal MSME support and financing nor participate in global value chains that require full compliance with all applicable regulations.

Facilitation for MSME

The Government of India has rightly identified the development of the country’s MSME ecosystem as a top priority for achieving Atma Nirbhar Bharat (self-reliant India).
India’s ambitious “Make in India” campaign aims to catapult the country up the manufacturing value chain to position itself as a global manufacturing hub.
Agencies such as the United Nations Industrial Development Organization (UNIDO), International Labour Organization (ILO), United Nations Development Programme (UNDP), UN Women, International Fund for Agricultural Development (IFAD) and others are working with MSMEs as they navigate a rapidly changing post-pandemic economic landscape.

Digitalisation

Digitalisation concerns the integration of digital technologies, such as big data, artificial intelligence and virtual reality, in business processes, also known as Industry 4.0.
With few exceptions, digitalisation into smart manufacturing operations is still in its infancy.
Therefore, there is a need for replicable digital solutions adapted for MSMEs, including digital enhancements for machinery and equipment currently in use.
Government initiatives such as the Digital Saksham and the interlinking of the Udyam, e-Shram, National Career Service (NCS), and Atmanirbhar Skilled Employee-Employer Mapping (ASEEM) portals show the promise of targeted digitalisation schemes.
- Digital Saksham is a capacity building initiative to create awareness on digitization for MSMEs in the country.
- Udyam is an online system for registering micro, small and medium enterprises launched by the Union MSME Ministry.
- The Ministry of Labour and Employment launched the e-shram portal which aims to register 38 crore unorganised workers.
- NCS is a National ICT based portal to connect the opportunities with the aspirations of youth and facilitate registration of job seekers, job providers, skill providers, career counsellors, etc.
- The Ministry of Skill Development and Entrepreneurship launched the ASEEM portal to help skilled people find sustainable livelihood opportunities. It acts as a directory of skilled workforce.

Reduced Environmental Impacts

Greening (the process in which an organization is becoming more aware of environmental issues) reduces the environmental impact of MSME operations and fosters cleantech innovation and entrepreneurship to accelerate the transition to a circular and low carbon economy.
Energy efficiency provides a case in point as business and climate benefits go hand in hand. For example, together with the Bureau of Energy Efficiency (BEE), UNIDO provided energy efficiency advisory services to 695 MSMEs in 23 clusters covering brass, ceramic, dairy, foundry and hand tool sectors.
As a result, these MSMEs invested themselves ₹81 crore in annual operating costs and prevented 83,000 tonnes of greenhouse gas emissions.
ILO works in Pune and Ahmedabad to formalise municipal solid waste management for clean food, textile and garment value chains in Odisha and Andhra Pradesh.

Job Creation

The Prime Minister’s Employment Generation Programme (PMEGP) is also creating opportunities for self-employment and micro enterprises, with over 7 lakh micro enterprises assisted in becoming economically viable.
PMEGP is a major credit-linked subsidy programme aimed at assisting first generation entrepreneurs for setting up micro enterprises in the non-farm sector by helping traditional artisans and unemployed youth.
Similarly, ILO, together with the Federation of Indian Chambers of Commerce & Industry (FICCI) and corporates, is supporting MSMEs in creating and retaining jobs, with over 150 MSMEs having improved productivity, aligned to international standards and integrated into global supply chains.

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