Author: Sundeep Mohindru

The Government of India introduced MSME in accordance with the MSMED (Micro, Small, and Medium Enterprises Development) Act of 2006. In November 2021, the government introduced the Special Credit Linked Capital Subsidy Scheme for MSMEs (Micro Small and Medium Enterprises) within the service industries. Recent scheme involves a 25 per cent capital subsidy for the purchase of appliances using institutionalized financing to SMEs for technological improvement.

The finance minister acknowledged the 'concern' that if MSMEs developed, they would lose their benefits across various government schemes. It's been well documented in the literature that Indian SMEs were deterred fr0m developing their business due to lack of regulatory capital constraints.

MSMEs additionally confront legacy difficulties such as adverse selection, company non-registration, insufficient and late credit, postponed debts, technical inadequacy, insignificant market linkages, and the lack of an exit policy, to name a few.

The ministry is determined to crank up this industry to establish a comprehensive growth and self-reliance, as MSMEs generate roughly 30 per cent of India's GDP, engage roughly 11 crore people, account for at least 40 per cent of export value, and therefore more almost half of them are based in rural Areas (Atmanirbhar Bharat).

Export profit is removed fr0m overall sales when evaluating the turnover of MSMEs under the redefinition, which is a healthy sign not only because of the sector and also for exports. The recent strategy is projected to act as a stimulus for the growth of 'new India,' as the old MSME definition had a regressive effect on enterprises' exports, growth prospects, and creation of employment.

Factors which led to emergence of MSMEs

Campaigns such as Smart India, Startup India, Digital India, and Make in India strive to fairness and equality for MSME operators and provide them a clear boost toward higher efficiency. Also Increased internet adoption and customer familiarity with cashless transactions, facilitated by B2C ecommerce operators, help the MSME sector thrive.

MSMEs now have access to quick mortgage financing thanks to partnerships with truly innovative non-banking finance (FinTech) firms. Furthermore, modifying work patterns: As the youngsters move away fr0m agriculture and focus toward today’s global economy.

MSMEs are being promoted by the government through several policies

MSME Postponed Payment Portal – will allow Micro and Small Businesses (MSMEs) across the nation to immediately submit their complaints about late payment fr0m Central Ministries/Departments/State Governments.

Newly launched Digital MSME Scheme entails the implementation of Cloud Services, in which MSMEs use the technology to browse both standard and personalized IT facilities.

ASPIRE (A Scheme for Promoting Innovation, Rural Industry, and Entrepreneurship) produces new positions and provides employment, fosters entrepreneurialism mindset, and encourages customized solutions, among other things.

The National Manufacturing Competitiveness Program (NMCP) aims to improve Indian MSMEs' international standing by enhancing their operations, layouts, innovation, and economic integration.

MSMEs have historically been known as the engine of economic growth and a means of supporting sustainable development across the globe.

Businesses account for more than 90 per cent of all businesses in most nations and are recognized with producing the strongest levels of workplace expansion.

SMEs have the potential to catapult India to new heights, thanks to minimal capital spending, scalability, and the ability to produce appropriate indigenous technologies.

As a result, it appears that MSMEs are driving a stealthy revolutionary.

Disclaimer: The writer is the MD and CEO at M1xchange. Views are personal