Uttar Pradesh Surges To Top Tier In MSME Sector, Securing 9% Share Through State Policies

Uttar Pradesh has secured a position among the top three states, making a significant contribution to the MSME sector. A report released by real estate consulting firm CBRE South Asia and the real estate developers association CREDAI revealed that Uttar Pradesh holds a substantial 9 per cent share in the total registered MSMEs across the country. The study highlighted the regional concentration of MSME activity, with Maharashtra, Tamil Nadu, and Uttar Pradesh collectively representing nearly 40 per cent of the total registered MSMEs in India.

The report underscored policy initiatives that have fostered the MSME ecosystem in Uttar Pradesh, including a 50 per cent interest subsidy for micro units capped at INR 25 lakh, an annual infrastructure interest subsidy of up to 50 per cent for approved projects with 10 acres or more, capped at INR 2 crore, and a 100 per cent stamp duty exemption in select regions for women entrepreneurs and MSME industrial park developers.

The Udyam scheme, a government initiative aimed at promoting MSME growth, has played a pivotal role in driving the sector's expansion, particularly in Uttar Pradesh. The report emphasized the evolving landscape of MSME financing in India, backed by technological advancements and collaborative partnerships.

MSMEs in Construction Sector

Several cities in Uttar Pradesh, including Agra, Kanpur, Varanasi, Lucknow, Meerut, and Ghaziabad, have emerged as MSME clusters, leading in the enrollment for the Udyam scheme. The state government has implemented various schemes to further incentivize MSMEs, contributing to the sector's growth.

The report highlighted the construction sector's opportunity for Indian MSMEs, constituting approximately 8 per cent of the GDP. With the construction sector set to become the third-largest globally in the next three years, unorganized firms within this domain are expected to benefit significantly by registering under the MSME ambit.

Bank-Fintech Synergy

The integration of digitization, traditional banking systems, and open protocols has created a more inclusive financing ecosystem, breaking down barriers for a broader segment of MSMEs. The collaboration between traditional banks and fintech firms is identified as a key driver in this transformative journey, combining banking expertise with fintech agility and data-driven capabilities.

Anshuman Magazine, chairman, India, Southeast Asia, Middle East & Africa, CBRE, said, “As the MSME sector continues to play a pivotal role in shaping India’s economic tapestry, Uttar Pradesh’s emergence as a powerhouse reaffirms its significance in driving growth and reducing regional imbalances. The transformative shift in MSME financing, fuelled by technology and collaborative partnerships, is dismantling barriers and fostering a resilient, innovative entrepreneurial landscape. Together, strategic initiatives and technological advancements herald a future where MSMEs not only contribute substantially to GDP, employment, and exports but also stand as beacons of inclusive and sustainable economic development.”

Vibrant Entrepreneurial Landscape

Boman Irani, CMD, Rustomjee Group, National President, CREDAI, acknowledged Uttar Pradesh's dominance in the MSME sector, attributing it to the state's vibrant entrepreneurial landscape and effective government initiatives.

“The Udyam scheme has been instrumental in fostering the growth of MSMEs, and the state’s strategic incentives have played a pivotal role in propelling India’s MSME landscape. The state’s position as a key contributor to India’s MSME sector underscores its potential as a catalyst for economic growth and job creation,” he said.

The report concluded by emphasizing the importance of nurturing the MSME sector through initiatives that address existing challenges and proactively foster an ecosystem encouraging innovation, creativity, skill development, technology adoption, and streamlined regulatory procedures. Such measures are essential for sustaining the sector's growth and ensuring its contribution to GDP, employment, and exports, it added.