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The 9th Global MSME Day was observed across various parts of India on 27th June. Reports indicate that discussions largely focused on three key areas: access to finance, product marketing, and technological challenges. The critical role of MSMEs in India’s economy was repeatedly highlighted. MSMEs are recognized as the second-largest source of employment in India after agriculture. According to the Press Information Bureau, India has 5.93 crore registered MSMEs, employing over 25 crore people. These enterprises contribute significantly to the country’s economic output, accounting for 45.73% of India’s total exports in 2023–24.

Key Announcements for MSMEs in the Union Budget 2025–26

Revised Classification Criteria — The investment and turnover limits for MSME classification have been raised by 2.5 times and 2 times respectively l Improved Credit Access — Measures have been introduced to enhance credit availability for MSMEs. l Credit Cards for Micro Enterprises — A new credit facility

of up to ₹5 lakh has been introduced for micro enterprises registered on the Udyam portal l Support for Startups and First-Time Entrepreneurs — Special provisions have been made to encourage new entrants into the sector l Focus on Labour-Intensive Sectors —  Particular attention has been given to sectors like footwear, leather, toy manufacturing, and food processing. l  Clean Tech

Initiatives — Dedicated support has been announced for MSMEs involved in clean technology manufacturing.

Persistent Challenges

In Kolkata and other cities, various industry bodies marked Global MSME Day with seminars and discussions. A recurring concern raised was the delay in accessing timely bank finance. Entrepreneurs also voiced their grievances regarding outdated technology and weak marketing support.

Many MSMEs supply goods and services to government departments and large enterprises, but often face delayed payments. Although there are clear regulations mandating payment timelines, these are frequently ignored. As a result, MSMEs are forced to bear additional interest costs, pushing up the overall cost of production.

Marketing challenges are another major issue. Despite producing quality goods at competitive prices, many units struggle to find buyers willing to pay fair prices, rendering them economically unviable.

Policy Recommendations from Economists

Separate Policy for Micro Enterprises — Some economists argue that micro and small units should be addressed separately from the broader MSME category. Micro units constitute the largest segment, both in number and employment, with nearly 6 crore units and 92% of MSME workers. A dedicated policy framework is essential for their development.

Cooperative Model for Sectoral Support — Experts suggest creating sector-specific cooperatives to handle finance, marketing, and technology needs. For example, a cooperative for micro footwear manufacturers can streamline access to resources and services. Similar cooperatives can be formed for other sectors like toys, food processing, utensils, and engineering tools. This model has been successfully implemented in parts of Kerala.

Employment Generation Potential at Risk — MSMEs are gradually losing their edge as employment generators—a trend observed globally. Even in China, employment growth in manufacturing has slowed over the past 13–14 years due to automation and labour-saving technologies. Policymakers must now focus on adopting intermediate, employment-friendly technologies.

Impact of GST and Demonetization — Several economists believe that the implementation of GST and demonetization adversely impacted micro and small units. Since these units often fall outside the input tax credit system, they face a cost disadvantage compared to organized sector firms. This has led to a shift of production away from micro units toward the organized sector. Corrective policy measures are needed to ensure a level playing field.

Conclusion

As India completes a decade of the ‘Make in India’ initiative in December 2024, data reveals a worrying trend: the share of manufacturing in GDP has actually declined. This has led to skepticism regarding India’s manufacturing future. However, the potential remains strong. With the right, targeted policy support, India can still achieve the goal of raising manufacturing’s contribution to 25% of GDP or higher.