Microscope | December 2024

In this issue, we showcase our projects, which will continue in further editions, and discuss the Indian MSME Sector through a report by Asian Development Bank. By presenting empirical research and evidence-based insights, we strive to enrich the ongoing discourse on how to address challenges, harness opportunities, and devise strategies for the unorganised sector within the entrepreneurial landscape.

The primary objective of this study is to document key issues and challenges within bamboo industry in the state of Maharashtra. The second objective is to identify necessary interventions to strengthen policy initiatives like – Gramodyog Vikas Yojana (Govt. of India MSME Scheme) and Krishonnati Yojana (Govt. of India Ministry of Agriculture Scheme) targeted towards strengthening bamboo industry in India.

Current Stage:

The project has been completed and the project report can be read on our website from the below link.

Exploring the Potential of Global Fruit Juice Market :?Opportunities for Small Entrepreneurs and Nano-Enterprises

by

Atul Kumar Sharma , PhD Scholar (Economics), Indian Institute of Foreign Trade (IIFT), New Delhi

The global fruit juice market is growing rapidly, driven by rising demand for health conscious and sustainable products. While large corporations dominate, small entrepreneurs have unique opportunities to tap into niche markets with innovative, value-added offerings. India’s diverse agricultural resources and government incentives position its small-scale businesses to compete globally. This article explores growth drivers, challenges, and strategies for Indian entrepreneurs to thrive in this dynamic sector.

Infographic Corner

Report of the Month

Asia Small and Medium-Sized Enterprise Monitor 2024: Designing an MSME Ecosystem for Resilient Growth in Asia and the Pacific?

by Asian Development Bank (ADB)

Within the evolving and often uncertain global economy, micro, small, and medium-sized enterprises (MSMEs) have shown increasingly inclusive and resilient growth across developing economies in Asia and the Pacific. Based on available data from 24 developing member countries (DMCs) of the Asian Development Bank (ADB) through 2023, MSMEs accounted for an average 98.7% of all enterprises, 64.6% of the workforce, and 38.3% of a country’s economic output. Most serve limited domestic markets, typically in distributive trade. Those that do export averaged 15.1% of a country’s receipts by value as of end-2023. There is a need for more innovative and globalized small firms, startups, and entrepreneurships in the region.

In 2023, the Ministry of MSMEs in association with the Small Industries Development Bank of India (SIDBI) launched a project to formalize informal microenterprises. As part of the initiative, the Udyam Assist Platform was created. MSME data were recalculated based on the new platform, including data on informal microenterprises. Under the new calculations, as of end-March 2024, MSMEs totaled 41.5 million firms, with 98.4% microenterprises, 1.5% small firms, and 0.1% medium-sized enterprises (Figure 10.1A). By sector, wholesale and retail trade accounted for 44.8%, followed by other services (35.9%) and manufacturing (19.3%) (Figure 10.1B). Most MSMEs operated in Uttar Pradesh, India’s most populated state, followed by West Bengal and Gujarat.

Commercial bank loans to MSMEs have increased steadily post pandemic. By end-2020, the MSME credit market stagnated with almost no growth from 2019, totaling ?17.0 trillion. As the number of registered MSMEs rose, commercial banks responded to the increased financing demand. As of end-2023, MSME loans outstanding reached ?24.0 trillion, up 19.3% from 2022, accounting for 17.5% of total commercial bank loans outstanding, equivalent to 7.9% of GDP (Figure 10.5A). The share of MSME nonperforming loans (NPLs) to total MSME loans has fallen gradually to 5.5% in 2023, down from 7.4% in 2022. However, the ratio continued to exceed gross NPLs to total bank loans (3.9% in 2023).

MSME credit from urban cooperative banks followed a similar trend. By end-2023, MSME loans reached ?658.5 billion, up 17.9% from 2022, accounting for 19.9% of total loans outstanding (Figure 10.5B).

Digital financial services offer alternative financing options to MSMEs, but the market remains small. Emerging equity markets—BSE SME Exchange and NSE Emerge—supplement banks in providing growth capital for eligible small firms. The MSME policymaking process has been centralized through well-organized intragovernmental coordination under the National Board for MSMEs. The national financial inclusion strategy launched in 2020 acts as a benchmark for improving MSME access to formal financial services.

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