MSMEs and their impact on Indian GDP

The development and expansion of the khadi and coir industries in India and other rural sectors marked the beginning of MSMEs. Due to their significant contributions to GDP, exports, and the creation of jobs, micro, small, and medium-sized enterprises (MSMEs) are the foundation of the Indian economy.

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The impact of Industry

In FY19 and FY20, over 63 million MSMEs dispersed across the nation contributed 30.5% and 30% to India's GDP, therefore?giving Indian economy a significant boost. The industry is the second-largest employment generator in India as of FY 2022, with more than 111 million people employed.

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Despite using technology sparingly over the past two decades, the MSME sector has seen tremendous growth. It has potential to scale up via effective utilisation of technology and implementation of e-markets and digitalisation in manufacturing processes.

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The Future scope:

MSMEs are key to the US$ 5 trillion Indian economy. However, MSMEs must develop into significant corporations if India is to experience rapid growth over the following ten years. India needs to triple the number of large-scale businesses, with over 1,000 mid-range businesses currently scaling up. Budget allocation for the MSME sector in FY22 more than doubled to Rs. 15,700 crores (US$ 2.14 billion) from Rs. 7,572 crores (US$1.03 billion) in FY21.

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Affirmative policies and financial assistance from the federal and state governments may help India transition to a manufacturing-based economy with high growth rates. Through a clear vision and tangible plans involving MSMEs, India can achieve its goal of achieving sustainable fiscal and socioeconomic growth.