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Micro, Small, and Medium Enterprises (MSMEs) in India: Catalysts for Economic Growth

India proudly holds the distinction of having the world’s second-largest MSME base, trailing only behind China. This dynamic sector plays a pivotal role by offering an extensive array of services and contributing to the production of over 6,000 diverse products, ranging from traditional to cutting-edge innovations. Fueled by the Indian government’s emphasis on fostering a self-reliant economy, known as Atmanirbhar Bharat, the MSME sector is on a trajectory of rapid expansion and seeks deeper integration with global value chains.

Government Support and Policy Initiatives

MSMEs in India benefit significantly from targeted government policies. Initiatives such as sector-specific Production-Linked Incentives (PLI) programs, region-focused incentives, and schemes promoting technical skills and digital advancements receive consistent backing. Special relief measures are also rolled out in response to unforeseen events like the COVID-19 pandemic, underlining the government’s commitment to the sector’s resilience.

Quantifying the MSME Landscape

Estimates indicate a robust MSME ecosystem, comprising approximately 63.05 million micro-industries, 0.33 million small enterprises, and around 5,000 medium enterprises. Uttar Pradesh claims the largest share at 14.20%, closely trailed by West Bengal at 14%, with Tamil Nadu and Maharashtra contributing 8% each.

Revised Criteria for MSME Qualification

Since July 1, 2020, a revised categorization defines MSMEs in India based on updated criteria. The classification hinges on both investment and turnover for entities operating in manufacturing and services sectors. Micro, small, and medium designations are determined by specific thresholds for plant and machinery/equipment investment, coupled with annual turnover limits, reflecting the government’s commitment to fostering a thriving MSME landscape.


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