World MSME Day 2023: Understanding Impact And Importance Of Micro, Small, And Medium-Sized Enterprises

The commemoration of World MSME Day aims to bring attention to the noteworthy contributions of MSMEs and acknowledge their potential as drivers of economic growth, job creation, and poverty reduction

The MSME sector contributes around 30 per cent to India's GDP and over 40 per cent to its exports, while also generating 110 million job opportunities.

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The United Nations designated June 27 as Micro, Small, and Medium-Sized Enterprises (MSME) Day in 2017 to honor the crucial role played by the MSMEs in achieving the Sustainable Development Goals (SDGs) and their contribution to the global economy. MSMEs foster creativity, innovation, and provide decent employment opportunities. The commemoration of World MSME Day aims to bring attention to the noteworthy contributions of MSMEs and acknowledge their potential as drivers of economic growth, job creation, and poverty reduction. It serves as a platform to increase awareness regarding the challenges encountered by MSMEs, including limited access to finance, technology, skill development, and market opportunities.

Why MSMEs Are Crucial?

According to the UN, MSMEs account for up to 90 per cent of businesses, 60 per cent to 70 per cent of jobs worldwide, and contribute significantly to global GDP.

According to the MSME Ministry's FY23 annual report, India has approximately 63 million MSMEs, based on data from the National Sample Survey (NSS) 73rd round conducted in 2015-16. This number is the second highest globally, trailing only China's estimated 140 million micro and small enterprises. The MSME sector contributes around 30 per cent to India's GDP and over 40 per cent to its exports, while also generating 110 million job opportunities. They produce a wide range of value-added products, ranging from traditional to advanced technologies.

Sanjeev Kumar, Co-Founder, Executive Director and CEO of Spice Money says, “The recent report by the Reserve Bank of India highlighted that the MSME sector is projected to exceed pre-COVID levels by 25 per cent in 2023-24, showcasing its significant contribution to the nation's economic recovery. With approximately 99.8 per cent of MSMEs being unregistered, this sector plays a crucial role in the unorganised sector's output and employment. It contributes about 29 per cent to India's GDP and employs over 11 crore workers, making it a vital pillar of our economy."

George Alexander Muthoot, Managing Director of Muthoot Finance told ABP Live, “The growth and significance of the MSME sector are vital for India's progress as a leading global economy. By promoting financial inclusion, generating widespread employment, and empowering entrepreneurs, they aim to contribute to the country's development. With the 'Make in India' initiative attracting investments, MSMEs can act as the backbone for high-growth businesses."

CSO of Arihant Capital Shruti Jain echos him, adding that we need an ecosystem that provides MSMEs with the necessary support and tools they need to survive and thrive in the current challenging environment. She said, “While financial support is important for MSMEs at every stage of growth, the most effective way to support them is by pairing it with advisory services and capability-building. For MSMEs to be future-ready, they need to keep up with digitisation, put in place a decarbonisation strategy (and implement it timely), and focus on securing the right talent (and upskilling them).” 

What MSMEs In India Need

According to Samik Roy, Executive Director, Corporate, Medium, Small Business, Microsoft India a key indicator of how any organization will perform during times of uncertainties or adversities, is its digital maturity. The last few years have proved that MSMEs, like all other businesses, must think beyond the ‘now’ to stay resilient and agile in today’s digital era. While working with thousands of SMBs across the country, we have learned that their most pressing challenges revolve around security, productivity, efficiency and growth."

"MSMEs can unlock their potential by moving to a secured cloud and deploying cost-effective solutions that not only address their current challenges but can also scale in functionality as the business grows. As a longstanding partner to this ecosystem, we are focused on democratising technology so that its benefits can reach the smallest of the businesses and empowering them with the right solutions and skills to accelerate their digital transformation journey.” he added. 

While the digitalisation of MSMEs is important, another crucial aspect is funding. 

"During the pandemic, NBFCs played a crucial role in reaching the last mile and providing credit solutions. They catered to the underbanked and underserved segments, supporting self-employed individuals, MSMEs, and women borrowers with their credit requirements,” said George Alexander Muthoot, MD of Muthoot Finance. 

According to Sandeep Menon, the Founder, MD, and CEO of Vastu Housing Finance, although India has made remarkable progress in financial inclusion owing to various government initiatives and digitisation efforts, there remains a substantial gap to be bridged for credit-underserved MSMEs.

"MSMEs are the backbone of India's growth. However, there remains a substantial gap to be bridged for credit-underserved MSMEs. Small businesses need innovative servicing and underwriting approaches that enable them to procure finances for building thriving businesses. Empowering these entrepreneurial ventures is key to shaping the future of India,” he said. 

World MSME Day Celebrations In India

On the occasion of International MSME Day, the Ministry of MSME is celebrating ‘Udyami Bharat-MSME Day’ on at Vigyan Bhawan, New Delhi. The Ministry of MSME will launch initiatives like the CHAMPIONS 2.0 Portal and Mobile App for Geo-tagging of Cluster Projects and Technology Centers. Results for 'MSME Idea Hackathon 2.0' will be declared, and 'MSME Idea Hackathon 3.0' for Women Entrepreneurs will be launched. Certificate distribution to Gold and Silver ZED certified MSMEs, and digital transfer of Rs 400 crore, and Margin Money subsidy to 10,075 PMEGP beneficiaries will take place. MoUs among various organisations of the government of India will also be signed.

The Ministry aims to improve the business environment, promote innovation, regional development, and market opportunities. It also focuses on creating employment, enhancing productivity, and fostering the competitiveness of MSMEs nationwide.

In addition to observing World MSME Day, India also celebrates National Small Industry Day on August 30 every year to honor the significant contribution of the small-scale industry towards India's growth. On August 30, 2000, the government introduced a comprehensive policy package specifically aimed at supporting the small industry sector, and since then, the country has been observing National Small Industry Day to commemorate this milestone.

What Industry Says

Vidushi Kapoor, CEO of Process9 and a Nasscom's SME Council member said that according to the latest data from NASSCOM, Indian tech MSMEs are projected to yield an impressive revenue range of $35-40 billion by 2030.

"As we observe World MSME Day, it is imperative to acknowledge the crucial role played by the government in fostering the growth of MSMEs through their strategic policies and digital initiatives. Measures such as improving access to timely and sufficient credit, the introduction of the Udyam portal, preference given to MSMEs in government procurement, and the provision of subsidies during the pandemic have proven to be vital lifelines for Indian MSMEs,” she added.  

"MSMEs are the engines of economic progress, contributing significantly to GDP, exports, and overall industrial development. They play a crucial role in bridging regional disparities, empowering local communities, and ensuring inclusive growth," said Karan Bhargava, Director of Bhargava Phytolab and CEO Homoeo Amigo, adding that ”it is vital that government introduces more policies for this segment so that it can contribute to building a strong and resilient economy."

Ankit Shyamsukha, CEO of ICA Edu Skills, and, Founder of IDCM, said, “Let's celebrate the resilient and innovative spirit of MSMEs, as they are the backbone of our economy, contributing 30 per cent to industrial output and creating 40 per cent of new jobs annually. Governments, financial institutions, and society must collaborate to create an enabling ecosystem, ensuring easier access to finance, fostering innovation, and promoting digital literacy.”

Prashant Gupta, Founder & CEO of Caerus3 Advisors and Think-Tank said, "We proudly acknowledge the immense significance of Micro, Small, and Medium Enterprises in the Indian economy. These dynamic and resilient entities are the lifeblood of our nation's economic landscape, driving innovation, fostering entrepreneurship, and generating substantial employment opportunities.” 

Karan Panchal, MD and CEO of Tikku Condiments said, “By fostering an enabling environment, facilitating access to finance, promoting technological advancements, and simplifying regulatory processes, we can empower MSMEs to thrive and flourish. Their success is intertwined with the prosperity of our nation, and it is incumbent upon us to provide them with the necessary tools, resources, and support they need to realize their full potential.” 

Anoop Singh, Director Operations at Red Orchid Spa said, “As India charts its course towards prosperity, embracing the MSME sector's immense potential is of paramount importance. We call for comprehensive policy interventions, strategic investments, and streamlined regulatory frameworks that will enable MSMEs to thrive and contribute even more robustly to India's economic ambitions.” 

Lakshmi Venkataraman Venkatesan, founding and managing trustee, Bharatiya Yuva Shakti Trust (BYST) and daughter of the former President of India R Venkataraman, said, "With over 64 million units, the MSME sector contributes 30 per cent to India's GDP. OBC and SC-ST communities own 66.27 per cent of MSME units while women own about 20 per cent, as per the 2022-23 report of the Ministry of MSME, Government of India. Revitalising the sector holds the key to empowering women, backward communities, and Dalits, and fostering inclusive economic growth."  

"Collaboration between the government, private sector, civil society, and youth is vital for fostering grassroots entrepreneurship and generating mass job opportunities. A circular economy ecosystem needs to be developed, to encourage local entrepreneurs to create and sell products using locally sourced raw materials, by employing local youth to create wealth for the local community.  An Entrepreneurship Development Programme with Business Idea Contests and Mobile Mentor Clinic visits every month can empower grassroots entrepreneurs and vastly improve their chances of success. Special schemes, grants, and mentorship programmes for rural entrepreneurs can address urban-rural disparities in business ownership. For example, by providing free Entrepreneurship Training to youth who run Common Service Centres (CSCs) in each Aspirational Block Gram Panchayat," Lakshmi Venkataraman Venkatesan said.