Understanding How MSMEs are Boosting the Indian Economy

Micro-small-and-medium enterprises (MSMEs) have long been regarded as the engine of economic growth and a means of achieving more equitable development. The MSME sector's labour density is much higher than that of large corporations. In most economies, MSMEs account for over 90% of total enterprises and are credited with generating the highest job growth rates and a significant share of industrial production and exports. The sector has shown admirable adaptability and innovation in surviving the recent pandemic, and it has a lot of room to develop in the future.

But there are several hurdles that Indian MSMEs have to contend with. There is often a lack of timely funding for small businesses. Then there's the competition from big businesses, which have more negotiating power, access to capital, and the capacity to scale. In short, India's MSME sector is both exciting and challenging; it faces numerous challenges, even though the MSME sector’s contribution remains critical.

Let's have a look some contributions from the MSME sector:

Employment Generation

In India, the MSME sector, second only to agriculture, provides job opportunities for a huge population. Four people are projected to be employed for every lakh invested in fixed assets in the small-scale sector. MSMEs are important not only because they create jobs at a low cost but also in the industrialization of rural and underdeveloped regions, reducing regional imbalances and ensuring an equal distribution of national income and wealth. Hence the MSME sector’s contribution to the Indian economy is crucial.

Export promotion

The MSME sector’s contribution has been immense for the Indian economy. The following facilities/incentives are available to assist MSMEs in exporting their products: 

1. Products manufactured by MSMEs are shown in international exhibitions, with the government covering the logistics cost.
2. MSME exporters are kept up to date on the latest technology.
3. Packaging standards, techniques, and training programmes for exporters are organized in various parts of India in association with the Indian Institute of Packaging.
4. Individuals are given assistance for overseas fairs/exhibitions under the MSME Marketing Development Assistance (MDA) Scheme.

What are the opportunities for MSMEs?

Because of the following reasons, the prospects and opportunities for MSMEs are enormous:

• Less capital intensive
• Extensive government promotion and support 
• Small-scale business reservation for exclusive manufacturers
• Project profiles 
• Funding - financing and subsidies
• Machine procurement, raw material procurement, workforce training, technical and managerial skills, 
• Tooling and testing support, reservation for exclusive government purchase, and export promotion

The MSME sector’s contribution to the economy has been enormous, especially towards job creation and rural industrialization, due to their low capital intensity and high labour absorption. This sector is ideally suited to draw on the strengths of our conventional skills and expertise by infusing technology, resources, and creative marketing practices. This is an excellent time to start small-scale ventures, as the outlook appears to be optimistic and encouraging, provided these industries follow all the preventive measures.

Kinara Capital appreciates and acknowledges the MSME sector’s contribution to the Indian economy. Therefore, we want to make capital accessible to all the small business owners without any hassles or delays. We have customized loan products for your business needs. The interest rates start at 24% per annum on a reducing rate basis. The loan tenure ranges from 12months to 60 months depending on the product, and you can avail of a loan of upto Rs. 30 Lakhs. 

Get a quick eligibility check done on our website and get one step closer to availing of a collateral-free business loan.

The solution can be taking an instant business loan.