MSME Sector Drives India’s Economy with Record Growth and Resilience

India's MSMEs have seen exceptional development in exports, increasing from ₹3.95 lakh crore in 2020-21 to ₹12.39 lakh crore in 2024-25. This astonishing rise highlights the essential role of MSMEs in strengthening the Indian economy and broadening the country's global trade footprint. The number of exporting MSMEs increased significantly, rising from 52,849 in 2020-21 to 173,350 in 2024-25.

MSMEs accounted for 45.73% of India's exports in 2023-24, a figure that increased somewhat to 45.79% by May 2024, highlighting their growing importance to the country's trade performance.

The MSMEs have continually demonstrated resilience and adaptability, contributing significantly to India's GDP. MSMEs' Gross Value Added (GVA) was 29.7% of GDP in 2017-18 and is expected to rise to 30.1% by 2022-23. Despite the challenges of the COVID-19 pandemic, the sector contributed 27.3% in 2020-21 and increased to 29.6% in 2021-22.

These data highlight the sector's critical role in promoting economic growth and stability. MSMEs have also emerged as a key engine of employment and innovation, creating millions of job opportunities and promoting inclusive economic development.

The shift of businesses into higher categories within the MSME classification framework is a key measure of the sector's progress. As to the Revised Classification, effective July 1, 2020:

· A Micro Enterprise is defined as a business with an investment in plant and machinery or equipment not exceeding ₹1 crore and an annual turnover capped at ₹5 crore

· A Small Enterprise is one where the investment in plant and machinery or equipment is limited to ₹10 crore and the annual turnover does not surpass ₹50 crore.

· A Medium Enterprise is characterised by an investment in plant and machinery or equipment of up to ₹50 crore with an annual turnover ceiling of ₹250 crore.

Between July 2020 and July 2024, the number of businesses upgrading to Medium status increased significantly. From 2020-21 to 2021-22, 714 microenterprises and 3,701 small enterprises were converted to medium enterprises. This momentum increased from 2023-24 to 2024-25, with 2,372 Micro enterprises and 17,745 Small enterprises making the transition.

MSMEs, often known as the backbone of India's economy, play an important role in job creation, entrepreneurship, and long-term development. Their tenacity, adaptability, and creativity have accelerated India's march towards becoming a worldwide economic powerhouse.

As India seeks to expand its position in global trade and economic affairs, the MSME sector continues to play an important role in promoting innovation, creating jobs, and improving export competitiveness. This growth trajectory demonstrates the sector's strong future and long-term contribution to the national economy.