Role of MSMES in rejuvenating the economy

The world is in a transition phase that demands innovative approaches to solving problems of micro and macro environment. India has major chunk of MSME segment where cluster of talent and technology can be unleashed backed by proactive policies to enhance the economic and social fabric of our nation.

The Micro, Small and Medium Enterprises (MSMEs) play a pivotal role in the economic and social development of the country's economy often acting as a nursery of entrepreneurship. They also play a key role in the development of the economy with their effective efficient flexible and innovative entrepreneurial split. The MSME sector contributes significantly to the country's manufacturing output, employment and exports and is credited with generating the highest employment growth as well as accounting for a major share of industrial production and exports.

MSMEs have been globally considered as an engine of economic growth and as key instruments for promoting equitable development. The major advantage of the sector is its employment potential at low capital cost. The labor intensity of the MSME sector is much higher than that of large enterprises. MSMEs constitute more than 90% of total enterprises in most of the economies and are credited with generating the highest rates of employment growth and account for a major share of industrial production and exports. In India too, MSMEs play an essential role in the overall industrial economy of the country. In recent years the MSME sector has consistently registered higher growth rate compared with the overall industrial sector. With its agility and dynamism the sector has shown admirable innovativeness and adaptability to survive the recent economic downturn and recession.

The MSME sector in India is highly heterogeneous in terms of the size of the enterprises, variety of products and services and levels of technology. The sector not only plays a critical role in providing employment opportunities at comparatively lower capital cost than large industries but also helps in industrialization of rural and backward areas, reducing regional imbalances and assuring more equitable distribution of national income and wealth. MSMEs complement large industries as ancillary units and contribute enormously to the socioeconomic development of the country.