The number of MSMEs closed since the government’s Udyam registration portal launch on July 1, 2020 post-Covid has jumped to 35,680 as of February 5, 2024, as per the government data. Out of total closures, 13,290 units were shut in the financial year 2022-23 while FY22 saw the closure of 6,222 MSMEs and 175 units in FY21. In the current financial year, as of February 5, 15,993 MSMEs have closed their businesses.
According to the data shared by Minister of State in the MSME Ministry Bhanu Pratap Singh Verma on February 8 in a written reply to a question in the Lok Sabha, the majority units — 8,967 were shut in Maharashtra followed by 4,606 in Tamil Nadu, 3,243 in Gujarat, 2,925 in Uttar Pradesh and 2,723 in Rajasthan.
The closures since July 2020 were 0.09 per cent of 3.70 crore units registered on the Udyam portal, as of Monday.
“Cancellation of Udyam registration can be for multiple reasons including, change of location, and change of business besides closure of business,” Verma had informed Parliament in December last year.
In terms of job loss, while data on the temporary or permanent loss of jobs in the MSME sector is not maintained by the government, 63,248 people working in the MSME sector had lost their jobs between July 1, 2020, and July 20, 2022, as per data shared by Verma in the Rajya Sabha on July 26, 2022. This included 19,862 jobs lost in FY21, 42,662 in FY22, and 724 till July FY23.
As of February 12, 2024, the total employment reported by 3.70 crore Udyam-registered MSMEs stood at 17.03 crore, as per data from the Udyam portal in comparison to 9.31 crore jobs as of December 19, 2022.
According to a report by consulting firm RedSeer in August last year, the penetration rate of MSMEs selling goods online is expected to double from 2-3 per cent with 1.5-2.5 million online sellers to 5-6 per cent by 2027, reaching 5.5-6 million online MSME sellers.
As a result, the additional around 4 million digital MSME sellers will likely generate over 35 million additional jobs by FY27.