Importance of Micro, Small and Medium Enterprises (MSMEs) in Indian Economy

Importance of Micro, Small and Medium Enterprises (MSMEs) in Indian Economy

India started as an agrarian economy with majority of population engaged in agriculture as their main occupation and means of livelihood. With passage of time, growing families, fragmented land holdings this occupation lost its lustre and could not support families fully. MSMEs which were promoted by the government just after attaining independence became an alternative occupation. This became the second big alternative to create employment.

The importance of MSME sector must be understood and realised as explained below.

The Figure above depicts the importance of MSMEs for any economy. It supports:

1. Entrepreneurship—It provides opportunities to people who have passion to start their own enterprise rather than seeking employment and lead the same.
2. These are essential as vendors because they have niche expertise.
3. They provide employment to large no of people and keep people engaged.
4. Since they are adaptable and flexible, they can produce for exports according to different customer needs in specifications and quantity.
5. Since they are agile, they can make course corrections fast and therefore resilient.
6. They are essential for widespread economic growth.
7. They can innovate quickly because of simple decision-making structure.
8. They provide economic diversification and regional development.

Public Procurement Policy makes it mandatory for public sector companies to procure 25% of their total purchases, from MSMEs including a special provision of 3% procurement for women entrepreneurs. This policy supports creating demand for MSMEs products.

We must all support MSMEs to create employment, help growth of economy, utilize the skills of individuals, ensure social peace, harmony and happiness, produce diverse products for domestic consumption and for exports.

For all these the leadership has to be developed and nurtured which is vital for success of the enterprises.