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SME FOCUS
WHY EXCLUSIVE EMPHASIS ON MANUFACTURING FIRMS IN MSME SECTOR IS IMPERATIVE TO TRANSFORM INDIAN ECONOMY MR. RONAK CHIRIPAL CEO, Nandan Terry MSME manufacturing firms have been imperative to the growth of the Indian economy. These small-to-mediumsized ventures have always contributed largely to the country’s GDP, thus contributing to different aspects of its development.
Key Points • The Indian MSME sector contributes about 29% towards the GDP
for the country. Digital and entrepreneur boom in the country
All over the world, small and medium enterprises have always been considered the engines of growth. Only MSMEs • Only MSME have the advantage to providing opportunihave the advantage of bringing latent entrepreneur talent and ties to the various sectors of society The Indian MSME sector providing opportunities to varcontributes about 29% to- • MSMEs’ increased output will increase demand for manuious sectors of society. wards the GDP through its facturing machinery. national and international Also, the young entrepreneur trade. As per the MSME • MSME helps to accelerate the rate of economic growth. talent in the country is keen Ministry data, as of May on making digital deals. After 16, 2021, India has approximajor events such as demonmately 6.3 crore MSMEs etisation and the current panoptimal output in less time, it further (including both service and manufac- reduces the cost of production. demic, there has been a rise in digital turing firms). It is to be noted that this transactions. According to a survey by sector still has a lot of unexplored ter- Increased Per capita Income web hosting solutions provider, Blueritory for growth. It won’t be wrong to The MSME manufacturing sector, host, Indian Micro, Small and Medium say that, with so much growth poten- which gives livelihood to so many fami- Enterprises (MSMEs) are prioritistial, emphasising the development of lies, is a driving factor for the per capita ing payments digitally over cash. The MSME manufacturing firms can work income of the country. With more MS- survey further revealed that out of 400 as a long-term development tool for In- MEs, more and more households’ per MSMEs who participated in the survey, dia. capita incomes increase, which leads to 72 percent transacted digitally, as coma general increase in lifestyle and over- pared to 28 percent who chose cash. Low Capita Requirements all development in the economy. Espe- This is one such sphere that can help One of the plus points of the MSME cially in these uncertain times when the youth channelize the country’s manufacturing units is their low-cap- the world has been hit by COVID-19, resources towards a common goal of ital-intensive setups. These organisa- India, like other countries, would like growth. tional units work with the manpower to depend less and less on exports. In and raw materials that are easily such changing scenarios, MSMEs can Infrastructure Development available in the particular geographi- prove to be the pillars of the changing The rise in demand for machinery and cal regions. Such set-ups can also economy. raw materials for setting up MSME absorb semi-skilled and unskilled graduates into their work forces. Thus, As per a study by the Centre for Civ- units leads to not just the B2C trade solving issues like unemployment, sea- il Society, the manufacturing sector but also the B2B trade. This leads to sonal unemployment, and disguised among MSMEs, which is a little larger inter-industry trade generation too. unemployment for the youth of the than the services sector, constitutes More production by MSMEs will lead country. In short, MSME units operate 90% of the total industrial units spread to more demand for manufacturing maall over India. Only 55% of the total chinery. which further requires largewith fewer business overheads. MSMEs units are located in urban arAnother advantage that MSME manu- eas; the other 45% of the units are lo- scale industries for the production of facturing businesses have over other cated in rural areas of states like Uttar machinery. As a result, the infrastrucbusinesses is their ability to produce Pradesh, Maharashtra, Tamil Nadu, ture is growing. goods quickly. With the ready availabil- West Bengal etc. This leads to an eq- It won’t be wrong to say that focusing ity of labour and a small managerial uitable distribution of national income, on the development of MSME manufachierarchy, decisions can be taken and poverty alleviation, and inclusive eco- turing firms will not just help in ecoimplemented faster than in organisa- nomic growth. Thus, growth in MSMEs nomic growth but will also accelerate tional units with large structures. With can surely predict an increased GDP the rate of its growth. • Optimal output in less time helps to reduce cost production
OCTOBER 2021
