Commentary: Draft National Policy for Micro, Small and Medium Enterprises

May 16, 2022

CUTS International appreciates the objective and vision of the MSME Ministry, to facilitate a vibrant ecosystem for the rapid growth of the sector along with the infrastructure linkages, risk capital, raw materials and marketing facilities. CUTS international in all means aims to support the government in promoting accessible and affordable technology and its subsequent upgradation. Along with promoting a conducive environment covering ‘ease of doing business - EoDB’ and suitable exit.

The Ministry of MSME has released the draft National Policy for MSMEs in India and has recommended “specific action areas” to ensure the sector’s speedy growth. The action areas include Intergovernmental Roles & Responsibility, Legislation and Regulatory Framework for MSMEs in India, Access to Finance/Financial Assistance for MSMEs, Technology Upgradation/ Adaptation, Skill Development, Knowledge Management, Ease of Doing Business, Development of MSME Code and Exit Code.

The Micro, Small and Medium Enterprises) (MSMEs) is a highly vibrant and dynamic sector. With over 6 crore units, having 28% share of GDP and having 40% of the exports, it provides employment to 11 crores+ people. The MSMEs sector is a key contributor to India’s socioeconomic development. India comprises approximately 6.3 crore MSMEs and the number of registered MSMEs increase on an average of 18 percent every year. The MSMEs sector contributes approximately 30 percent towards the Indian Gross Domestic Product (GDP) through its domestic and international trade.

The Indian government envisions doubling the country’s economy to US$ 5 trillion by 2026 and to achieve this goal, it aims to enhance MSMEs’ share in exports and its contribution to the GDP. In addition to action areas identified by the government, focused initiatives on leveraging the potential of e-commerce to benefit MSMEs can act as game changer. Established e-commerce platforms can provide the necessary human capital skills to make the most of the opportunities through an e-business strategy that is simple, practicable, and workable within the context of a global information milieu and new economic environment. With its effect of levelling the playing field, e-commerce coupled with the appropriate strategy and policy approach can enable small and medium scale enterprises to compete with large and capital-rich businesses.