The Impact of MSME on the Indian Economy

Summary
The MSME Sector has been a key driver of the Indian Economy. It plays a vital role in driving this rapidly developing economy by fostering the spirit of entrepreneurship and creating employment opportunities even with low capital investment.

What is MSME?

MSME is often used as the Micro, Small, and Medium Enterprises acronym. These are businesses engaged in producing, processing, and preserving goods and commodities. In 2007, the Ministry of MSME came into being. It aims to support MSMEs and provide them a conducive environment to grow well to their potential by making policies, facilitating programs, and supervising the end-to-end implementation of policies to ensure they are implemented well.

Types of MSMEs

As per the MSMED Act, 2006, MSMEs can be divided into two main categories. Those categories of MSMEs are described below;

Manufacturing Enterprises
Businesses involved in the manufacturing or producing goods for specific industries that are listed under Schedule I, Industries (Development and Regulation Act, 1951), come under the purview of the MSME companies adding value to the finished products by employing plants and machinery that fall under the same category.

Service Enterprises
If we look at the Service Enterprises, these are the enterprises engaged in rendering services. According to the definition of 'Enterprise' under the MSMED Act, the service provider should be an industrial undertaking/concern/establishment. However, an individual service provider would not be qualified as a service provider. Register your service based business at https://www.setindiabiz.com/start-business-india

What is the Role of MSMEs in Indian Economic Development?

MSMEs play a pivotal role in the Indian economy. Some of MSME's key contributions to India's Economic growth are described below;

Fostering Entrepreneurship: MSMEs foster an ecosystem of self-reliance and innovation; therefore, they help new businesses easily obtain a startup/business loan to run their startup smoothly.

GDP Contribution & Employment Generation: MSMEs are a key driver of the Indian economy, solely contributing approximately 30% to the overall Gross Domestic Product (GDP) of India. This sector requires human labour, so it employs a large number of people.

Contributing in Exports: This sector contributes substantially to India's exports reinforcing economic growth. Presently, MSMEs contribute around 45% to India's total exports. Offering a plethora of products, MSME strengthens the presence of India in the global trade arena.
Driving Innovation: MSMEs' agility enables small and medium businesses scope to experiment with new ideas and leveraging new technologies, boosting competitiveness in the country.

Therefore, you can understand that MSMEs have a significant impact on the Indian Economy. Get your small business registered today!

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This release was published on openPR.