Micro, Small, and Medium Enterprises (MSMEs) form the backbone of India’s industrial framework and play a defining role in realizing the nation’s economic aspirations. With the government’s focus on initiatives such as Atma Nirbhar Bharat, Make in India, and the Performance Linked Incentive (PLI) scheme, the vision to transform India into a global manufacturing hub is becoming a tangible reality.
The ongoing policy push across key sectors - defence, aviation, electronics, and finance - has opened new opportunities for private participation and MSME growth. A prominent example is the collaboration between Apple and Foxconn, which established manufacturing facilities in India to produce locally assembled devices.
At the same time, India’s landmark $34 billion aviation deal between Air India Limited, Boeing, and Airbus underscores the growing potential for MSMEs to become part of global supply chains. The agreement, which includes 220 Boeing aircraft and 250 Airbus passenger jets, represents an enormous opportunity for local enterprises to supply components and services within the aviation ecosystem.
Role of MSMEs in India’s Economic Growth
The Role of MSME in India extends far beyond business operations. These enterprises contribute significantly to GDP growth, employment generation, and equitable regional development. They serve as a vital link between large industries and rural economies, ensuring that growth reaches every part of the country.
According to the National Sample Survey (NSS) 73rd round, conducted by the Ministry of Statistics & Programme Implementation, there are approximately 633.88 lakh unincorporated non-agricultural MSMEs engaged in a wide range of economic activities.
1. Employment Generation
MSMEs are among the largest job creators in India, offering employment opportunities at a lower capital cost than large industries. They employ vast numbers of semi-skilled and unskilled workers, playing a crucial role in reducing unemployment and underemployment across the country.
2. Industrialization of Rural Areas
A defining feature of MSMEs in India is their role in driving industrialization beyond metropolitan regions. By establishing operations in rural and semi-urban areas, MSMEs help minimize regional imbalances and enable more equitable distribution of wealth.
The NSS survey indicates the spread of MSMEs across various sectors:
196.65 lakh engaged in manufacturing
0.03 lakh in non-captive electricity generation and transmission
230.35 lakh in trade
206.85 lakh in other service activities
Through these contributions, MSMEs help build self-sustaining local economies that complement the country’s larger industrial framework.
Government MSME Schemes: Building a Stronger Foundation
The Indian government has introduced several MSME schemes aimed at strengthening competitiveness, improving access to finance, and promoting technological adoption. These initiatives serve as a catalyst for both existing enterprises and emerging ventures within the startup ecosystem.
Key schemes include:
Prime Minister’s Employment Generation Programme (PMEGP): Supports the creation of micro-enterprises by providing financial assistance to first-time entrepreneurs.
Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE): Enables collateral-free credit for micro and small businesses.
Micro & Small Enterprises - Cluster Development Programme (MSE-CDP): Encourages cluster-based development to enhance productivity and innovation.
Zero Defect Zero Effect (ZED) Certification Scheme: Promotes quality manufacturing with an emphasis on sustainability.
Digital MSME Scheme: Encourages enterprises to adopt digital tools for better efficiency and market reach.
Collectively, these MSME schemes create an enabling environment for innovation, export competitiveness, and employment growth, while nurturing a resilient and technology-driven MSME sector.
MSMEs and the Startup Ecosystem: A Collaborative Future
The synergy between MSMEs in India and the startups is creating a new wave of industrial innovation. While startups bring fresh ideas, digital agility, and technological disruption, MSMEs provide the scale, operational infrastructure, and industry experience to bring those ideas to life.
This collaboration strengthens India’s position as a competitive manufacturing and service hub. By embracing digitalization, sustainability, and cross-sector partnerships, MSMEs can transition from being local suppliers to global players.
Organizations like ViTWO support this transformation by offering Virtual CFO services tailored for MSMEs. These services empower enterprises to make informed financial decisions, enhance profitability, and maintain compliance while focusing on growth and innovation.
A 5-Step Workflow for Performance Excellence
To remain competitive in a rapidly evolving global market, MSMEs must adopt a structured approach to performance management. The following five-step workflow can guide continuous improvement:
Assess the organization’s current performance and identify operational or financial gaps.
Benchmark against peers and industry standards to establish realistic targets.
Strategize a performance plan focused on measurable and sustainable outcomes.
Execute the plan with discipline, ensuring alignment across departments.
Evaluate and Refine by reviewing results, addressing gaps, and updating strategies.
This cyclical process ensures continuous learning, adaptability, and long-term competitiveness.
Final Thought
Despite facing challenges such as limited access to finance, infrastructure constraints, and regulatory complexities, MSMEs in India continue to demonstrate exceptional resilience and growth potential. Their adaptability, entrepreneurial spirit, and innovative approach are central to India’s progress toward becoming a global manufacturing leader.
With the right guidance and support, MSMEs can leverage government MSME schemes, embrace digital transformation, and actively collaborate within the startup ecosystem to strengthen their market position.
ViTWO Finance provides end-to-end strategic and financial advisory through its Virtual CFO services, helping MSMEs capitalize on new opportunities, streamline operations, and achieve sustainable growth.
Now is the time for Indian MSMEs to take bold steps forward. Together, let us build an economy that reflects innovation, self-reliance, and global excellence.
Sign up today for a Free Diagnostic Study specially designed for MSME growth solutions - and join the movement to make India the next global manufacturing hub.