Context: The MSME sector in India has witnessed remarkable growth, significantly boosting exports, contributing to GDP, and driving economic development.

• Despite challenges like the COVID-19 pandemic, MSMEs demonstrated resilience and adaptability, scaling up enterprises and enhancing export competitiveness.

MSMEs’ Contribution to India’s Export Growth

• MSME exports rose significantly from Rs 3.95 lakh crore in 2020-21 to Rs 12.39 lakh crore in 2024-25.

• The number of exporting MSMEs increased from 52,849 in 2020-21 to 1,73,350 in 2024-25.

• MSMEs contributed 45.73% to India’s exports in 2023-24, which further increased to 45.79% by May 2024.

MSMEs’ Role in India’s GDP

• The Gross Value Added (GVA) by MSMEs in GDP grew from 29.7% in 2017-18 to 30.1% in 2022-23.

• Even during the COVID-19 pandemic, MSMEs maintained a significant GDP contribution of 27.3% in 2020-21 and rebounded to 29.6% in 2021-22.

• This demonstrates MSMEs’ resilience and pivotal role in India’s economic stability.

Growth and Upgradation of Enterprises

• MSMEs are classified into Micro, Small, and Medium Enterprises based on investment and turnover criteria revised on July 1, 2020.

• Micro Enterprise: Investment ≤ Rs 1 crore; Turnover ≤ Rs 5 crore.

• Small Enterprise: Investment ≤ Rs 10 crore; Turnover ≤ Rs 50 crore.

• Medium Enterprise: Investment ≤ Rs 50 crore; Turnover ≤ Rs 250 crore.From 2020-21 to 2021-22, 714 Micro enterprises and 3,701 Small enterprises scaled up to Medium.

• The trend grew stronger in 2023-24 to 2024-25, with 2,372 Micro enterprises and 17,745 Small enterprises upgrading to Medium enterprises.

Significance of MSMEs for Economic Development

• MSMEs are instrumental in employment generation, entrepreneurship promotion, and inclusive growth.

• The sector fosters innovation, supports export competitiveness, and strengthens India’s position as a global economic leader.

• By creating employment opportunities and driving economic development, MSMEs serve as the backbone of India’s economy.