By Dhanendra Kumar
India’s economic journey is measured in GDP growth and export targets, but its heart beats in various human stories of its micro, small, and medium enterprise (MSME) entrepreneurs. Be it a vendor of hand-painted homeware from rural Odisha, a small woodcraft unit owner in Rajasthan, a Madhubani painter from Bihar, terracotta artisans from the East and Northeast, or handloom clusters from Kutch to Kanchipuram—one has to look for the human face behind them, and their hard work, resilience, creativity, and enterprise. When a Kashmiri artisan’s carpet reaches New Delhi, or an Assamese weaver sells to a buyer in Hyderabad, India’s trillion-dollar dream is being quietly woven. MSMEs are not just the backbone of the economy, they are its capillaries carrying ideas, skills, and dignity into every corner of India and overseas, with e-commerce providing them an economic backbone.
According to the government’s latest official estimates, MSMEs contribute over 30% of GDP. They employed over 120 million people, and comprised over 46% of exports in FY24 through to FY25, as the number of exporting units rose from 53,000 in FY21 to 1.73 lakh in FY25.
Over the past five years, e-commerce has equipped small producers with reach, digital storefronts, logistics, and customer analytics that once belonged only to big brands. Flipkart’s Samarth programme, launched in 2019, illustrates what targeted platform support can do. It offers onboarding, training, cataloguing, fee waivers/discounts, packaging guidance, and connects artisans, weavers, self-help groups (SHGs), and micro-entrepreneurs to hundreds of millions of customers. According to Flipkart, Samarth has impacted nearly 1.8 million livelihoods, and its annual “Big Billion Days” is supporting millions. This is also true of Amazon.
MSMEs double as India’s most democratised entrepreneurship engine. Women-owned enterprises are registering in large numbers on the government’s Udyam platforms, and policy initiatives are gradually raising participation.
What makes the MSME story distinct is its geography of grit. In Kashmir, artisan cooperatives onboarding to marketplaces have found a channel for GI (geographical origin)-tagged crafts beyond tourist seasons. In Varanasi, artisans are experimenting with sari designs, home décor, and wearable formats that fit online customer tastes without diluting authenticity. In Rajasthan, small woodcraft and stone-inlay units pair centuries-old skills with modern branding and global shipping.
These are not fairy-tale pivots; they are careful iterations—learning product photography, refining packaging to survive courier networks, and adapting catalogue names so search works in Hindi and English. The entrepreneurs decide what to make, who to hire, the changes in design and strategies.
What’s working
Market access at scale: Digital marketplaces and social commerce shrink distance. Campaigns like “Crafted by Bharat” compress discovery cycles that used to take years.
Formalisation and credit: Rising Udyam registrations and employment signal formal footprints that can unlock bank credit.
Export momentum: Near-half share in exports and a 3x jump in exporting MSMEs since 2020 show integration with global demand.
Where improvement is needed
Last-mile logistics and compliance burden: Small sellers wrestle with returns, damage claims, and ever-changing labelling/tax norms that eat into margins.
Working capital gaps: Even with better credit disbursement, many micro units rely on informal finance. Faster invoice discounting (TReDS), predictable platform payout cycles, and deeper supply-chain finance can help.
Skilling for digital commerce: Cataloging, SEO, photography, packaging, data-driven pricing need continuous hand-holding.
Gender gaps: Women-owned enterprises often remain micro, constrained by collateral, care responsibilities, and mobility limits. Dedicated logistics windows, micro-grants, and SHG-to-MSME graduation paths will be helpful. The impact is profound: women’s earnings go directly into children’s education, healthcare, and better nutrition, compounding MSME benefits for society.
Regulatory support: At times, regulatory bottlenecks eat into time and initiatives involved.
India is aiming for a multi-trillion-dollar economy over the next decade, undeterred by erratic tariffs. We have also to protect their designs like Kolhapuri chappals from copycats.
For all their dynamism, MSMEs face systemic challenges: working capital stress (delayed payments and lack of collateral often push units towards informal finance); logistics and compliance hurdles (from GST filings to packaging norms, the cost of compliance eats into margins); and digital readiness gaps (while e-commerce is a boon, many entrepreneurs struggle with cataloging, photography, SEO, and customer service).
If MSMEs are to fuel the next phase of growth, policy and platforms must converge on solutions.
Simplify norms: Standardise compliance requirements across states and sectors to reduce red tape.
Link credit with commerce: Enable invoice-level financing tied directly to marketplace orders, reducing working capital stress.
Skill for the digital age: Move from one-time workshops to continuous handholding in cataloging, branding, and customer management.
Strengthen women’s participation: Provide targeted logistics, micro-grants, and SHG-to-MSME graduation pathways.
Promote cluster branding: GI-tagged crafts and regional clusters must be marketed as brands so that communities retain value.
Supporting MSMEs and their e-commerce backbone is not charity; it is a sound economic strategy. If we back their stories, they will keep scripting India’s growth into a developed nation.
The writer is chairman, Competition Advisory Services India LLP.
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