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MSMEs are Growth Engine of India, Contribute 30% to GDP of India: Narayan Tatu Rane

MSMEs are critical to economic development. The sector employs more than half of all workers and accounts for more than 80% of all businesses. In emerging economies, the formal MSME sector accounts for up to 40% of GDP.

Shivam Dwivedi
Narayan Tatu Rane, Minister for MSME, Government of India
Narayan Tatu Rane, Minister for MSME, Government of India

Addressing the ‘Maharashtra MSME Conference’ organized by ASSOCHAM, the Minister for MSME, Government of India, Narayan Tatu Rane highlighted the catalyzing role of MSMEs in the growth of India. He emphasized that MSME sector is contributing 1/3rd to India’s GDP and has remarkable potential to grow further.

Rane highlighted the focus of the Government on promoting MSMEs vide multiple schemes which have been initiated over the last eight years to strengthen the MSME ecosystem in the country. He also added that MSMEs need to be supported with better infrastructure and access to technology and finance.

He further added, “moving forward, there is a collective attempt to popularize and increase acceptance for the ‘Made in India’ tag within the country and globally. There is also an increasing effort to double the number of micro industries in the next five years from the current 6 crores. And, we should focus on grooming high growth industries which are going to be the future growth drivers of the economy and the country.”

Minister went on to add that the youth of the country are going to be the flag bearer of the growth of India, and hence needs to be supported by way of better work opportunities, training and an entrepreneurial eco-system.

Sivasubramanian Ramann, CMD, Small Industries Development Bank of India, said, “Five years ago there were 6.3 crore MSMEs and today there is more than 9 crore MSMEs in the country. Out of these, 1.5 crore MSMEs are under GST. The remaining MSMEs also need finance from banks and NBFCs but are not on the radar of banks because they don’t have Udyam number. With Udyam number banks can categorize lending to MSMEs as priority sector loans. In order to bridge this gap, SIDBI is working with micro-finance institutions and small NBFCs to provide loans to small business entities. More than 5 crore MSMEs will benefit from a special digital program that is being set up to provide Udyam numbers to them in the next two years.”

“We have the experience, ability and competence to give money for greenfield projects and many banks provide additional assistance to projects funded by us. Maharashtra has immense potential and has got 3.5 lakh crore in funding from about 22lakh crore that has gone into funding MSMEs in the country. Payment to MSME will need to be further strengthened using digital data available with the Ministry of Corporate Affairs.” he added.

Vinod Pandey, Chairman, ASSOCHAM National Council on Global Value Chain and Director, Govt. Affair and External Affairs, BMW India, said, MSMEs play a key role in economic development. The sector accounts for over 80% of businesses and contributes to more than half of the employee share. The share of the formal MSME sector in the GDP is up to 40% in emerging economies. The importance of the sector in India’s economic growth cannot be over-emphasized.

The presence of over 63 million MSMEs employing over 110 million people staggered across services, the manufacturing sector contributes nearly 30% to the GDP. Maharashtra has about 48 lakh MSME accounting for about 8% of the total MSMEs in the country. The ambitious target of $5 billion economy with 25% contribution from the manufacturing sector will require the MSME sector to play a pivotal role. In addition to the various facilitating schemes announced by the government to support the sector, ramping up investment in the sector will be crucial.

Suhail Nathani, Chairman, ASSOCHAM WTO, Trade & Investment, Council and Managing Partner, ELP, said, “The MSME sector has always played an important role in economic development besides the positive impacts on the societal front. They not only boost domestic production but also generate employment and has enormous potential for earning through export. As we look forward to accelerated growth, MSME must be enabled to play a larger role in the scheme of things. Amending existing FTA’s and ensuring that future FTAs include a charter on MSME will have a significant impact on the ability of small Indian producers to align with globalized trading regimes and explore cross-country opportunities more effectively. Such a move will also go a long way in promoting capacity building and efficient utilization of available resources.”

The event drew participation for important stakeholders such as Kamlesh Gandhi, Co-Chairman, ASSOCHAM MSME Development, Council and CMD, MAS Financials, Joyjit Gupta, Sr. Vice President, Regional Business Head, Kotak Mahindra Bank who also addressed the summit.

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