Role of MSME

MSMEs occupy a distinct position in India because of their contribution to the country's socio-economic development. Emphasising MSMEs has always been an integral part of India's industrial strategy.

Broad developmental impact

• Developing MSMEs checks migration of the rural population to cities in search of work.
• They help reduce income inequalities, spread industry across regions (dispersed development), and build linkages with other sectors of the economy.
• The government sees promotion of MSMEs and rural industrialisation as a powerful instrument for achieving twin goals — accelerated industrial growth and additional productive employment in rural and backward areas.

Specific contributions

• Balanced regional development — Small industries account for about 95% of the industrial units in the country, spreading industry across regions.
• Major source of employment — MSMEs are the second largest employers after agriculture. They generate more employment per unit of capital invested than large industries, making them more labour-intensive and less capital-intensive — a boon for a labour-surplus country like India.
• Enormous variety of products — They supply mass-consumption goods (readymade garments, hosiery, stationery, soaps and detergents, domestic utensils, leather, plastic and rubber goods, processed foods and vegetables, wood and steel furniture, paints, varnishes, safety matches), sophisticated items (televisions, calculators, electro-medical equipment, overhead projectors, air-conditioning equipment, drugs and pharmaceuticals, agricultural tools and other engineering goods), and export-valued handlooms, handicrafts and traditional village-industry products.
• Can be set up anywhere — Because they use simple technologies and locally available material and labour, MSMEs have few locational constraints and can spread widely, letting every region enjoy the benefits of industrialisation. …