MSME = Micro, Small, and Medium Enterprises, classified in India on the basis of:

• Investment in plant & machinery/equipment, and
• Annual turnover,
  as per the MSMED Act, 2006.

Purpose of classification: targeted policy support, incentives, regulation, easier credit + market access.

MSME Classification (Revised limits)

(Investment & Turnover limits raised: 2.5x investment and 2x turnover)

Micro

• Investment: ₹2.5 crore
• Turnover: ₹10 crore

Small

• Investment: ₹25 crore
• Turnover: ₹100 crore

Medium

• Investment: ₹125 crore
• Turnover: ₹500 crore

Objectives of MSMEs

MSMEs aim to:

• Promote entrepreneurship/self-employment
• Generate large-scale jobs (esp. rural/semi-urban) with lower capital
• Ensure balanced regional development
• Strengthen manufacturing + services through flexible production
• Encourage innovation, skill, tech adoption
• Boost GDP, exports, value addition
• Support women, youth, marginalized entrepreneurs via assistance + incentives

Contribution to GDP and Manufacturing

• MSMEs contribute 30.1% to GDP (2022–23)
• Share of manufacturing output: ~35.4%
• Provide resilience during shocks (COVID example used in the note)
• Support inclusive growth via spread across regions/sectors

Contribution to Exports

• MSMEs contribute 45.79% of India’s total exports (2024–25) (goods + services)
• Major export categories: textiles, engineering goods, pharma, leather, handicrafts, food products
• Medium enterprises contribute a large chunk of MSME exports due to scale/tech

Key Government Initiatives 

1) PM Vishwakarma Scheme

• For artisans/craftspeople integration into value chains
• Launched Sept 2023, outlay ₹13,000 crore (2023–24 to 2027–28)
• Skill training (5-day), collateral-free credit option, livelihood upliftment

2) Udyam Registration Portal

• Launched July 2020
• Free, paperless, self-declaration; no document uploads
• Linked with Udyam Assist Platform (Nov 2023) for informal micro-enterprises
• Mentioned impact: 5,93,38,604 registrations, employment 25.18 crore
• Helps access PSL + other schemes

3) PMEGP

• Credit-linked subsidy for micro-enterprises (non-farm)
• Project cap: Manufacturing ₹50 lakh, Services ₹20 lakh
• Subsidy:
  • Special category: 35% rural, 25% urban
  • General: 25% rural, 15% urban
• Adds EDP training, geo-tagging
• 2023–24: 89,118 units, subsidy ₹3,093.87 crore, jobs 7,12,944

4) SFURTI

• Cluster-based regeneration of traditional industries
• Started 2005–06, revamped 2014–15
• Achievements: 513 clusters approved, 376 functional, grants ₹1,336 crore, artisans 2,20,800

5) Public Procurement Policy for MSEs (2012)

• 25% of annual procurement from MSEs
  • Within this: 4% SC/ST, 3% women
• 358 items exclusively reserved for MSE procurement

MSMEs and Women Empowerment 

• Women in PMEGP special category (higher subsidy)
• 3% procurement reserved for women-owned MSEs
• PM Vishwakarma: skills + collateral-free credit for women artisans
• SFURTI clusters help collective market access
• Credit linkage via Stand Up India, PMJDY, MUDRA, etc.
• Training (EDPs), market exposure (exhibitions, e-commerce, trade fairs)

Challenges 

• Credit constraints (collateral/credit history)
• Delayed payments (including govt/large buyers)
• Low tech + digital adoption
• Skill shortages, limited training access
• Competition from large firms/imports
• Weak market access (national + global)
• Low awareness of schemes

Way Forward 

• Expand collateral-free finance + credit guarantee
• Enforce timely payments under MSMED provisions
• Push tech upgradation + digital tools + e-commerce enablement
• Scale skill + entrepreneurship training (artisan + MSME)
• Stronger market linkages via clusters, fairs, portals
• Aggressive outreach for scheme awareness
• Incentivize sustainability, green manufacturing, R&D innovation