Can MSMEs Reduce the Burden of Indian Imports?

April 2, 2023
Updated on

The COVID-19 pandemic had a disproportionately large impact on the MSME sector. However, they have recovered from the phases and returned to the market with increased vigour and vitality. According to the trade group PHD Chamber of Commerce and Industry, India's local businesses, especially micro, small, and medium-sized companies (MSMEs), in 36 subsectors, may gradually cut the country's 40% imports from China, which is around USD 35 billion, without making any significant extra expenditures.

These products are produced at lower volumes in India. However, the chamber's president, Pradeep Multani, said in a statement that "recent dynamic schemes announced by the government, such as PLI and PM Gati Shakti, have enhanced the sentiments of Indian producers to produce more at a competitive cost, which will give considerable competition to China."

New Foreign Trade Policy

According to a report by The Economic Times, the Department of Commerce will likely release a new Foreign Trade Policy the following month that might explain how to reduce the compliance burden on small exporters and give financial support to MSMEs to increase exports. The report quoted an official as stating, "We are working on measures to facilitate e-commerce exports through the policy," adding that the new policy might be made public by the end of the next month.

Government's Initiatives to Boost the Manufacturing Output of Various MSME Sectors


All electronic products contain a significant number of semiconductors. Over the past few years, the semiconductor market in India has also experienced proportionate growth as a result of growth in the electronics manufacturing sector. According to industry estimates, India's semiconductor consumption was estimated to reach INR 1.1 lakh crore in 2020, and as there are no commercial semiconductor fabs in India, this need is being satisfied through imports.

Electronics and Gadgets:

The Indian government has taken a number of measures to improve domestic electronics production, lessen dependence on imports, and boost exports. The Make in India Initiative, National Policy on Electronics (2019), Production Linked Incentive Scheme for the Electronics Sector, Modified Special Incentives Scheme, Electronics Manufacturing Clusters (EMC) Scheme, and numerous other initiatives are made to encourage domestic manufacturing, localisation of electronics manufacturing, attracting foreign direct investment, and boosting exports.

Agri-based Products:

Manufacturing businesses in all industry sectors, from small to large, are included in India's food processing sector. The Cabinet approved the Production Linked Incentive Scheme for the Central Sector during its meeting (PLIS). It suggests financial incentives to modernise and boost the competitiveness of the food processing sector by producing specific food product categories with significant potential for output growth and value addition.

Auto Component Parts:

In order to increase the manufacturing of electric and hydrogen-fueled vehicles, the government approved a production-linked incentive (PLI) scheme for the automotive industry worth around 26,000 crores. According to government projections, the PLI scheme will create up to 7.5 lakh jobs for the automotive sector.

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Role of Technology and Innovation to Boost Growth

Innovations serve as the engine that propels the economy. Nearly all industries, including agriculture, manufacturing, and services, are impacted by technology and its rapid expansion as well as its acceptance. Innovations and technical developments are crucial in determining how businesses and ventures contribute to the economic growth of the country and how they expand globally to lessen the load of Indian imports.

The Ministry of MSME has created a number of programmes to stimulate the use of cutting-edge manufacturing technology as well as knowledge based innovative MSMEs or ventures. These programmes are primarily intended to encourage and support small business owners' untapped creativity. The use of cutting-edge manufacturing technologies as well as knowledge based innovative MSMEs or ventures can boost domestic production. 

The Ministry also encourages interaction with MSME-Technology Centres, which assist small business entrepreneurs in growing their businesses by supporting planning, strategy, and execution. The Technology Centres act as an integral part and are crucial to the growth of business.


The world is currently changing quickly, and organisations must continually innovate by implementing new technology to maintain their competitiveness. It raises the bar for quality and builds the necessary infrastructure to support more domestic manufacturing. Science and technology have made great strides in recent years, which opens up a wide range of technical advancements in several fields. There have been attempts made to set up the appropriate labs, technology centres, and incubation units to promote the improvement of equipment and machines for all industries.

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