RBI ESINABARD ESISEBI
In one line
MSMEs’ Contribution to the Economy
- Share in GDP (Gross Value Added):
- 2020-21: 27.3%
- 2022-23: 30.1%
- Export Growth:
- 2020-21: ₹4 trillion
- 2024-25: ₹12.39 trillion
Key Challenges Hindering MSME Growth
- Lack of Medium-Sized Enterprises:
- India has a large number of small firms, but very few scale up.
- Even large firms often operate through multiple small plants instead of scaling due to regulatory and political risks.
- Regulatory Overheads:
- Compliance burden discourages business expansion.
- Stringent labour laws lead to increased contractualisation of labour instead of formal employment.
- GST-Related Issues:
- Public Accounts Committee Report: MSMEs and exporters face challenges in GST compliance, impacting business operations.
Initiatives to Support MSMEs
- DxEDGE Platform (Launched by CII, NITI Aayog, AICTE)
- Helps MSMEs with digital tools and knowledge for competitiveness.
- Aims to assist small businesses in adopting technology for growth.
- Labour Law Reforms:
- New labour codes passed but not implemented due to lack of consensus.
- Urgent need for stakeholder alignment to facilitate ease of doing business.
- Proposed Deregulation Commission:
- PM Narendra Modi’s Proposal aims to eliminate redundant regulations.
- Can reduce compliance burdens and foster business expansion.
Policy Recommendations
- Implement labour law reforms to simplify compliance.
- Address GST-related concerns to ease tax compliance for MSMEs.
- Fast-track deregulation initiatives to remove unnecessary restrictions.
- Enhance access to technology & finance for MSME growth.
For MSMEs to thrive and drive economic growth, India needs a business-friendly regulatory framework that facilitates scalability, digital adoption, and financial accessibility.
