Abstract

The MSME sector in India is undergoing transformation both in terms of size and structure in the process of growth. Current MSME sector growth signals scale expansion and transformation. Though constraints persist on multiple fronts, several emerging factors are favourable to MSME growth, scale expansion, and transformation. Increased investment limits, improvement in the ease of doing business through Udyam Portal, Small Finance Banks, improved credit flow, VC funding, fintech financing, skill mapping and training, digital marketing including GeM, government sponsored Open Network for Digital Commerce (ONDC) platform for e-commerce, and support from leading e-commerce companies like Amazon, Flipkart, etc. are together favourable to MSME growth, scale expansion, and transformation.

However, two key challenges have been emerging and gaining magnitude. (i) Fourth Industrial Revolution (Industry 4.0) characterized by the integration of man, machines, and production processes, and (ii) the imperativeness to achieve carbon emission reductions for sustainability, are two critical challenges which must be dealt with gradually and steadily. Financial constraints, knowledge constraints, and technology information constraints would prevent MSMEs to overcome these challenges on their own. Policy intervention has a decisive role to play. Towards this end, an Annual Survey of MSMEs is recommended. In addition, promotion of Large-Scale Enterprise (LSE)-MSME linkages, Higher Education Institutes-MSME linkages, LSE-Industrial Training Institutes linkages, exclusive small business management programs, introduction of climate finance, and a differential treatment for unorganized enterprises (for their survival) are suggested as the remedial measures. This can smoothen the process of MSME growth and transformation for greater vibrancy and competitiveness internally as well as externally, in the coming decades.