MSMEs: Driving inclusive growth and enterprise in India

Sujata Gautam

(State Coordinator, United Nations Office for Project Services. Can be reached at sujatagautam2017@gmail.com)

Micro, Small, and Medium Enterprises (MSMEs) are a vital component of India's economy. They are often described as the backbone of the nation's industrial and service sectors, given their substantial contribution to employment, production, and exports. In a country as diverse and populous as ours, MSMEs serve as an essential engine for inclusive economic growth, helping millions of people achieve financial independence while supporting innovation and entrepreneurship at the grassroots level.

The Government of India classifies MSMEs based on their investment in plant and machinery or equipment and their annual turnover. As per the latest classification announced on April 1st, 2025, micro enterprises are those with an investment of not more than Rs 2.5 crore and turnover up to Rs 10 crore. Small enterprises can have an investment up to Rs 25 crore and a turnover up to Rs 100 crore, while medium enterprises may have an investment up to Rs 125 crore and a turnover up to Rs 500 crore. The new classification is expected to boost economic growth and contribute to a stronger future for Indian businesses.

The importance of MSMEs in India is evident from the scale of their operations and their socio-economic impact. These enterprises are the second-largest source of employment in the country after agriculture. They provide livelihoods to more than 110 million people across rural and urban areas. In doing so, they not only support families but also play a critical role in reducing poverty and encouraging skill development, especially among the youth and women. By offering job opportunities close to home, MSMEs also reduce migration to cities and promote sustainable development in semi-urban and rural regions.

India's push for a Viksit Bharat has placed MSMEs at the centre of its vision. As of 2024 - 25, employment has been provided to over 25 crore people through 6.5 crore MSMEs registered on the Udyam and Udyam Assist Portals. Under the PM Vishwakarma scheme, 29.9 lakh artisans and craftspersons have been registered, and 22.5 lakh of them trained in various skills. A significant 3000 crore in credit has been disbursed under this initiative, supporting traditional livelihoods across India.

Further, credit guarantees worth 9.8 lakh crore have been extended to 1.18 crore micro and small enterprises under the Credit Guarantee Scheme, reducing financial risk and enabling easier access to loans. Under the PMEGP (Prime Minister's Employment Generation Programme), over 10 lakh new micro enterprises have been established with a total subsidy of Rs 27,500 crore, generating employment for over 75 lakh people. This showcases the transformational impact of focused MSME support on job creation and entrepreneurship development.

India has also given focused attention to inclusivity in enterprise promotion. Through the National SC-ST Hub, holistic support has been provided, leading to public procurement worth Rs 3500 crore from SC- ST-led micro and small enterprises during 2024 -25. At the same time, India's rich traditional industries, like Khadi, have seen a significant revival. Khadi sales crossed Rs 7100 crore in 2024-25, giving a strong boost to rural employment and indigenous industries.

In terms of economic output, MSMEs contribute about 30 per cent to India's Gross Domestic Product (GDP). They form a substantial part of the manufacturing sector, contributing nearly 45 per cent to the country's manufacturing output. Their presence can be felt in almost every sector, including textiles, food processing, chemicals, pharmaceuticals, IT services, automobile components, handicrafts, and more. This diversity makes the MSME sector one of the most dynamic and resilient segments of the Indian economy.

One of the most striking aspects of the MSME sector is its role in foreign trade. Nearly 48 per cent of India's total exports come from MSMEs. These enterprises produce high-quality goods that are exported around the world, from handcrafted items and garments to precision tools and IT services. Despite their relatively smaller scale of operation, MSMEs contribute significantly to India's global trade footprint, strengthening the country's economic standing internationally.

In Assam, MSMEs have always been a reflection of our unique identity, culture, and local strengths. From handloom and handicrafts to food processing, bamboo products, and traditional wellness industries, Assam has long held immense potential for enterprise. To unlock this potential, the Government of Assam introduced the Assam MSME (Facilitation of Establishment and Operation) Act, 2020. This important legislation aims to simplify and encourage the setting up and smooth operation of MSMEs across the state. By streamlining approvals, reducing bureaucratic hurdles, and providing a single-window system, the Act ensures that aspiring entrepreneurs no longer feel daunted by excessive paperwork and procedural delays. It also allows for self-certification in certain areas, reducing unnecessary inspections and fostering trust between the state and its business community.

This Act represents a major shift toward making Assam truly business-friendly. With better support mechanisms in place, small enterprises are now able to focus more on innovation, productivity, and market expansion. Our state government has also taken steps to promote industrial parks, develop common facility centres, and support cluster-based development. These initiatives not only provide infrastructure and shared services to MSMEs but also enhance their competitiveness and ability to scale.

Furthermore, the integration of MSMEs into digital platforms is slowly transforming the landscape in Assam. With increasing awareness around e-commerce, digital payments, and online marketing, even the smallest businesses in rural areas are now exploring new markets beyond their local boundaries. Skill development programs and entrepreneurship training are being rolled out through various government and NGO-led initiatives, giving youth, especially women and first-generation entrepreneurs, the confidence to launch and sustain their ventures.

With Assam's strategic location as the gateway to Southeast Asia and the Northeast region, the potential for MSME-led growth is even more significant. If we continue to build on the foundation laid by policies like the 2020 Act and invest in connectivity, finance, and skilling, Assam can emerge as a model state for MSME-led inclusive development.

The future of MSMEs in India, and particularly in Assam, is full of promise. With the right ecosystem in place, including simplified regulations, adequate finance, skilled manpower, and supportive infrastructure, these enterprises can play a leading role in our journey toward economic self-reliance. As global markets shift toward sustainable and locally rooted solutions, the strength of our MSMEs will only become more relevant. From our rural heartlands to bustling townships, the growth of MSMEs is not just about economic statistics; it is a story of aspiration, resilience, and the spirit of local enterprise.

In conclusion, MSMEs are more than just a sector. They are a lifeline for millions, a symbol of our people's creativity, and a key pillar of both India's and Assam's economic future. As we continue to invest in their growth, support their evolution, and remove the obstacles in their path, we contribute not only to economic recovery and job creation but also to a more self-reliant and empowered society.