MSMEs in India: Growth and challenges

Abstract

The Micro, Small, and medium enterprises of India are an important driving factor for the growth of the Indian Economy. These MSMEs not only provide employment opportunities but helps in the process of industrialization in rural areas simultaneously reducing the unequal income distribution among the residents. The MSMEs contribute significantly to the development of the Indian economy through export production, domestic production, low investment requirements, operational flexibility, technology-oriented enterprises, etc. In India, after agriculture, small business is the second largest employer of human resources. MSMEs constitute more than 80 percent of the total number of industrial enterprises and support industrial development, 40 percent of industrial output, 80 percent of employment in the industrial sector, 45 percent of value added by the manufacturing sector, and 40 percent of total exports. In this paper, an attempt is made to know the growth and contribution made by Micro, Small, and Medium Enterprises in India and to understand the role of MSMEs in providing employment opportunities in India. The various problems faced by these MSMEs in executing their operations have also been discussed in this paper.