MSMEs: Renaissance of the Global Era

Small Scale Industries (SSI) already metamorphosed into Micro, Small and Medium Enterprises (MSMEs), encompassing larger gamut of businesses coming within the formal definition. With the adequate level of policy interventions, financial assistance, market development and wide range of structural changes, MSMEs now have the fostering ecosystem where they not only thrive but innovate and deliver to the global consumers.

MSMEs are contributing 45% and above to the overall Indian exports and it is steadily rising. There is no one reason that can be attributed to this growth. The resilience demonstrated by the MSME founders coupled with the strong government impetus towards supporting this sector will go a long way in paving the path to "2047 Vikshit Bharat" (2047 Developed India) goal.

Since the liberalization of 1991, India opened its door to the global companies. Exports from India is not a new phenomenon and this was happening from the time immemorial through the famous Silk Route where the textiles, agriculture products and spices exported from India. With the globalization and well interconnected world, India started exporting petroleum products, gems and jeweleries, garments, pharmaceuticals, chemicals, machinery, iron and steel, high-end engineering products, agricultural produces to name a few.

Key Boosters Leading to Unprecedented MSME Growth and Contributions:

• Bespoke products and solutions: Indian MSMEs are known for finding the quickest and sustainable solutions. In case of automobile and heavy engineering (including industrial products, machinery and equipment), MSMEs exports are increasing steadily at the rate of ~5%. Be it Peenya in Bengaluru; Oragadam cluster in Chennai; Taloja, Rabale of Mumbai; Kasba, Howrah near Kolkata - the industrial Units are plenty all across that are providing user specific customized products to global customers.
• Abundant Supply of Talent: The human capital dividend is unwavering in all spectrums of business. There are ample of blue collar workers who are ready to heavy lift the grass root level industrial and agricultural production. With 8800+ engineering colleges producing approximately 1.6 million engineering graduates every year, India is home to largest pool of engineering talent. Non-engineering colleges are equally contributing around 8.5 million graduates from about 44000 colleges. With large employable population, India is now becoming a favorite choice for large MNCs seeking to diversify and strengthen their supply chains. Indian MSMEs are well-equipped in grabbing and delivering expected outputs.
• Strong digital economy: Digital economy upsurge in the last decade witnessed by India is unparallel to any other economy across the globe. Launched in 2016, UPI was one of the game changer technology introduced in Indian fintech market enabling P2P and P2M transactions. In March 2025, UPI recorded over 18 billion transactions amounting to about $300 bn. You must have noticed a small placard or box with QR code for payment even in smallest of the road side stalls across India. Demonetization and COVID-19 are important factors behind wide range adoption of digital payments. Alongside, nil management fee on the billions of transactions also played crucial role in adoptions among the masses. On the cross border transactions, there are multiple initiatives by government and private sector that eases the export processes and collection complexities. Through Virtual Banking Account (VBA) facilities provided by private and public banks, collection issues are largely resolved.
• Government Support: The government actively supports MSME through various interventions directed towards ease of export, including dedicated support systems, schemes for technological upgradation and market access, and initiatives like the "Districts as Export Hubs" program. These interventions aim to facilitate access to credit, provide marketing support, and improve infrastructure for MSMEs, ultimately boosting their export competitiveness. The Ministry of MSME has established Export Facilitation Centre (EFCs) to provide mentoring, guidance and information on export related matters. Raising and Accelerating MSME Performance (RAMP) is launched to increase the access of MSMEs to technology, markets and credit. There are specific schemes, such as, for textiles-Rebate of State and Central Taxes and Levies (ROSCTL); for Steel, Pharma and Chemicals- Remission of Duties and Taxes on Exported Products (RODTEP); for credit protections-Export Credit Guarantee Corporation of India Limited (ECGC) etc., that are targeted for ease of business of the MSMEs exporting goods and services.
• Thriving eco-system: In the new India, there are abundant opportunities and robust eco-system where founders are identifying and working on multiple opportunities. The new-age innovations, cutting-edge technologies and path-breaking research-oriented think-tanks, nothing is untouched by our thriving community of MSMEs. In the words of Honorable Prime Minister Narendra Modi, "MSME sector is the backbone of India's manufacturing and industrial growth". The matured credit systems, well-oiled by Banks, NBFCs, venture capitalists and private equity firms along with angel investors provide the much needed funding (debt or equity or quasi debt) to the corporates with miniscule restrictions as compared to a couple of decades back. With active export trading councils, detailed think-tank report at a click of button, MSMEs are having competitive advantage of their product and industry related knowledge. There are accelerators and incubators who are providing much needed guidance and support to MSMEs and startups. Its important for MSMEs to know what they are looking for, they will get the solutions in their arm reach.

Emergent Service Sectors

When it comes to the export from India, how can we miss the contribution from Indian service sectors. The story started three decades back with the advent of Infosys, Wipro and other IT & ITeS service companies around Bengaluru; now it turned into a multibillion dollar exports contributing more than $200 billion to GDP of India. Key sectors include IT-BPM, various business services, telecommunication, computers and information services. The burgeoning Global Capability Centers (GCCs) are paving a new wave of growth to IT & ITeS sector, where multiple middle-sized, micro and nano delivery centers are mushrooming across India including Tier II and Tier III cities and towns. These companies are driving the innovations and product developments for their foreign sponsor companies. Most of the large GCCs are leveraging the deep expertise of MSMEs in similar sectors, together creating a strong never-ending positive growth spiral.

GCCs are becoming a source of revenue centric value addition and is driven by following principles:

1. Leveraging lower cost of services to extend penetration in the foreign company work
2. Source superior talent to raise the service quality
3. Reduce the hurdle rate for innovations to make new initiatives possible
4. Leverage data-driven customer analysis to design / refine / modify existing and new products / services
5. Exploit co-location of functional and regional capabilities to drive new service models
6. Drive product / service innovation to better cater to the requirements and serve larger market

There are MSMEs that are targeting setting up and operating the GCCs across India and giving the boost to this upcoming sector.

India is delivering services to 50+ countries; US, UK and Europe contributing 62% of the total services exported out of India. India is the fifth largest recipient of FDI inflows with the service sector being the highest FDI recipient in the country.

The MSME contribution to service sector cannot be undermined and it will continue to be the vena cava vein to the service sector.

Strategies for MSMEs to enhance Regional Export Opportunities

• Quality Enhancement: MSMEs need to look for and implement high-quality standards and practices to meet international market requirements and ensure products adhere to global norms. After COVID-19, most of the large companies are looking for China Plus One policy to structure and create a redundancy on their supply chain. This will ensure uninterrupted supply and developing additional market for their much-needed, mission-critical products. While there is significant scope for improvement in areas such as quality control, intellectual property regulations, and skill development, addressing these will better position Indian MSMEs to unlock their full potential and emerge as key players in the global economy.
• Technological Intervention: Indian MSMEs needs to leverage digitization and R&D to improve production techniques and post-harvest management, enhancing product quality and shelf life. As a sector, it needs to ask the right questions and reach out for appropriate tech-upgradation. In the digital age, MSMEs working in archaic ways not able to survive in the long run.
• Infrastructure Development: It is inevitable for MSMEs to invest in robust infrastructure, including cold storage, warehouses, and transportation networks, to facilitate efficient export logistics. On a small-scale basis, MSMEs need to look for innovative methods of cloud warehousing and leveraging transportation network best suitable for the products of the company.
• Market Access: MSMEs needs to participate in existing / develop unified bodies to handle market access requests and sanitary/phytosanitary issues, ensuring smoother trade negotiations. Government is providing multiple forums in its "One District One Product" initiatives. There are various local, regional and national level trade bodies that are making the access to new markets and assist in macro-level negotiations.
• Brand Promotion: MSMEs are leveraging 'Brand India' to increase market visibility and penetration, focusing on value-added and indigenous products. Globally, India got a panache on its handicraft items, organic food products, textiles and pharma solutions. It requires more concentrated efforts and geographical region-specific approach by MSMEs to grow their brand further.

To succeed, MSMEs need to build an open world and web of partnership that will grow over a period to reap the network effect. MSMEs is the resilient creed, and it will continue to flourish. The right question here are:

• How can we accelerate the pace of growth?
• How can we make the Indian product and services omni-present across the geographies that generate organic demand on its own?
• What are the key initiatives for symmetric information dissemination on market competition and product knowledge?
• How to create India a major sourcing destination for large markets globally?
• How to initiate research-backed, data-driven approach for future innovation that caters to the future requirements of the industry?

With the strong buoyancy effect, MSMEs are witnessing a strong trajectory. To continue the momentum, MSMEs continue to need strong support from all the stakeholders around. The world is becoming a common playground and a level playing field is offered to MSMEs to speak out loud and perform. At the outset, the future looks bright with certain apparent speed breakers. Yet, as time will say and prove (as always) that we were, are and will be the clan that go beyond barriers and prove our worth.