Ease of doing business for MSMEs: Contrary to the notion of reluctance among micro and small enterprises (MSEs) to grow into medium enterprises owing to the incentives offered by the MSME ministry, thousands of units have grown out of the MSE bracket, according to the government data. 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 the current financial year. Likewise, micro enterprises scaling into medium units grew from nearly 700 in FY22 to over 1,000 in the current FY, as per the data shared by the Department of Economic Affairs in its latest monthly economic review.
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, “belying the narrative that MSME units suffer from the inertia of rest and are reluctant to be upwardly mobile,” the February review noted based on the data of MSMEs registered on the Udyam portal.
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The Udyam registration portal fetches data from the portals of the income tax department and Goods and Services Tax Network (GSTN) and then classifies the registered MSMEs based on data on investment and turnover, the review report said.
However, KE Raghunathan, Convenor of trade associations representative Consortium of Indian Associations (CIA) said the registration numbers are based on registrations done on a daily basis and not on an annual basis from a fixed data available. “Therefore, it is not right to read the data over two years to say the difference in each year data infers elevation from smaller category to higher category,” Raghunathan told FE Aspire.
In terms of the sectoral break-up, of the total number of units graduating from small to medium, 15 per cent (561 units) were from the manufacturing sector in FY22 and 5 per cent (376 units) in FY23. Similarly, 7.7 per cent (287 units) were from the services sector in FY22 and 3.6 per cent (239 units) in FY23 while 4.7 per cent (175 units) were into trading in FY22 and 0.8 per cent (53 units) in FY23, analysis of the data provided in the review showed.
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With respect to the total number of units graduating from micro to small category, 53 per cent (15,380 units) were into manufacturing in FY22 and 45 per cent (29,035 units) in FY23, indicating “upward inter-category mobility among manufacturing, service and trading units. The significant chunk comes from the manufacturing sector, which is reassuring, given the higher employment-generating potential of this sector,” the review noted.
As of March 22, 1.64 MSMEs were registered on the Udyam portal, of which 1.58 crore were micro enterprises directly registered on the portal while 13.32 lakh micro units were registered through the recently launched Udyam Assist Platform (UAP). Registrations of small and medium units stood at 4.53 lakh and 40,693 respectively on the Udyam portal, according to the data available on the portal.