World MSME Day 27th June, 2023: The Indian MSME sector is one of the largest and most vibrant in the world. It plays a crucial role in India’s economy, contributing significantly to employment generation, manufacturing output, and export earnings. Not just India, world economies have a significant MSME presence. In fact, according to a note by the United Nations Conference on Trade and Development last year, formal and informal MSMEs make up over 90 per cent of all companies worldwide and have a share of, on average, 70 per cent of total employment and 50 per cent of GDP.
As the world celebrates MSME Day 2023, here are five facts about the Indian MSME sector which you might know but perhaps haven’t realised their true scale and size in comparison to other economies.
Versus China: Indian MSME sector, which comprises around 63 million units as per the National Sample Survey (NSS) 73rd round conducted during the period 2015-16, is the second largest sector for MSMEs in the world followed by China. The second-largest economy in the world, China also has the largest number of micro and small enterprises – around 140 million as of 2020, according to multiple media reports and OECD iLibrary — the online library of the Organisation for Economic Cooperation and Development.
Equals half of Pak’s GDP: Export of Indian MSME-related products, which stood at $190 billion in the financial year 2021-22, was equivalent to 50.4 per cent of Pakistan’s gross domestic product. According to the data from the International Monetary Fund, Pakistan’s GDP stood at $376.49 billion as of 2022. Indian MSME exports in FY22 had a share of 45 per cent in India’s overall export of $422 million during the fiscal and 42.67 per cent till August 2022.
A country in itself: The number of people employed by the Indian MSME sector is less than the population of only 13 countries in the world. In other words, 11.10 or 111 million employment generated by Indian MSMEs (as per the 2015-16 national sample survey) was more than the population of over 100 different countries in the world currently such as Vietnam which had 98 million people, Iran (89 million), the UK (67 million), France (64 million), Saudi Arabia (36 million), Australia (26 million), Germany (83 million) and more, as per data from the World Population Review.
Growing in size: An increasing number of micro and small enterprises are growing and evolving in size, “belying the narrative that MSME units suffer from the inertia of rest and are reluctant to be upwardly mobile,” the Department of Economic Affairs in its February economic review noted. The number of small enterprises elevating themselves to the medium category increased by 75 per cent from 3,699 in FY22 to 6,474 as of March 6 in FY23. Likewise, micro enterprises scaling into medium units grew from nearly 700 in FY22 to over 1,000 in FY23. The number of micro units graduating to small units also increased from 28,881 in FY22 to 65,140 in FY23 as of March 6.
Dominated by dwarfs: However, the Indian MSME sector, much like MSME ecosystems of other evolving economies, continues to suffer from dwarfism as out of 63 crore units, almost all of them are micro units. According to the data, more than 99 per cent are micro units while small enterprises are only 3.31 lakh and medium enterprises only 5,000 making up for 0.52 per cent and 0.01 per cent share respectively.