Effective Leadership in MSMEs

The growth of MSMEs is a significant driver of economic development

Shrikant N Pangarkar

Sr Partner, SIL

November 25, 2025

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The growth of MSMEs is a significant driver of the economic development of society. Learn to run an MSME successfully.

The figure on the next page depicts the importance of MSMEs for any economy.

Entrepreneurship--It provides opportunities to people who have the passion to start their enterprise rather than seek employment and lead the same.
These are essential as vendors because they have niche expertise.
They employ a large number of people and keep them engaged.
Since they are adaptable and flexible, they can produce for exports according to different customer needs in specifications and quantity.
Since they are agile, they can make course corrections fast and therefore resilient.
They are essential for widespread economic growth.
They can innovate quickly because of a simple decision-making structure.
They provide economic diversification and regional development.

Scenario of MSMEs in India (from CSIR & MSME Ministry Data)

MSME = Micro, Small and Medium Enterprises. Some figures are old. But they demonstrate the huge scale of the sector.

In India, 'small and medium enterprises' (SME) is a generic term used to describe small-scale industrial (SSI) units and medium-scale industrial and other micro-enterprises.

The MSME sector produces a wide range of industrial products such as food products, beverages, tobacco products, cotton textiles, wool, silk, synthetic products, jute, hemp & jute products, wood products, furniture and fixtures, paper products, printing publishing and allied industries, machinery, apparatus, appliances, and electrical machinery. The MSME sector also has a large number of service industries. The MSME in India comprises a diverse range of units from traditional crafts to high-tech industries. 80.5 percent of which are proprietary concerns and 16.8 percent are partnership firms and private limited companies. SSI is one of the significant segments of the Indian economy, and it is encouraged to grow through various promotion schemes by the government.

India has approximately 63 million MSMEs. The BSE-SME platform was expected to register more than 60% of MSMEs to bring in equity funds to meet their business requirements. The initial IPO witnessed 16 MSMEs enter the market and garner about Rs 100 Cr (INR 1 Billion) funds for their businesses.

(Data from IBEF report).

Policy Initiatives for MSMEs

Udyog AADHAAR memorandum--This is a one-page document, an online registration system for MSMEs based on self-certification. No supporting documents are required at the time of registration.
MSME Databank--This enables the Ministry of MSME to streamline and monitor the schemes and pass on benefits directly to the enterprises. MSME units can update their information about their product/services when required directly.
My MSME--To facilitate the enterprises to enjoy the benefits of various schemes the MSME office launched the "My MSME" app. This allows the enterprises to file their applications and check schemes on the App on their mobile phones.
Technology Center Systems Program--These 15 centers assist MSME industries in various sectors.
MSME Sampark--This is a digital platform for communication between MSMEs and job seekers for mutual benefits.
Direct Benefit Transfer (DBT)--The welfare and subsidy schemes of the Government are transferred digitally without delay directly to the MSME beneficiaries.

The MSME sector produces a wide range of industrial products and services. It comprises traditional crafts to high-tech industries, with 80.5% proprietary concerns and 16.8% partnership/private companies.

SSI is a significant segment of the Indian economy and is encouraged through government schemes.