How MSMEs uphold the backbone of India's economy This sector has emerged as a highly vibrant and dynamic area of the Indian economy over the last five decades.
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
The Micro, Small and Medium Enterprises (MSME) sector is one of the most rapidly growing segments of the Indian economy, playing a crucial role in job creation and economic stability. Supporting MSMEs has become a vital duty to stronghold the nation's economic foundation. The Prime Minister's employment generation programme (PMEGP) is a key initiative aimed at boosting employment opportunities in both rural and urban areas by facilitating the establishment of new self-employment ventures, projects and micro-enterprises. Recent updates have seen a significant increase in the maximum project cost permissible for new ventures, with the limit for manufacturing projects rising from INR 25 lakhs to INR 50 lakhs and for service sector units, from INR 10 lakhs to INR 20 lakhs, particularly in aspirational districts.
According to the 73rd National Sample Survey (NSS) conducted by the National Sample Survey Office under the Ministry of Statistics & Programme Implementation during 2015-16, there were 633.88 lakh unincorporated non-agricultural MSMEs across India. These enterprises spanned various economic activities, with 196.65 lakh in manufacturing, 0.03 lakh in non-captive electricity generation and transmission, 230.35 lakh in trade and 206.85 lakh in other services, excluding those registered under the Factories Act, 1948, and the Companies Act, 1956.
The micro sector dominates the MSME landscape, with 630.52 lakh enterprises accounting for over 99 per cent of the total estimated MSMEs. The small sector comprises 3.31 lakh MSMEs, representing 0.52 per cent, while the medium sector, with 0.05 lakh MSMEs, accounts for a mere 0.01 per cent of the total. Of the 633.88 lakh estimated MSMEs, 324.88 lakh (51.25 per cent) are located in rural areas, while 309 lakh (48.75 per cent) are in urban areas.
Gender-based Ownership
Out of the total 633.88 lakh MSMEs, 608.41 lakh (95.98 per cent) are proprietary concerns, with male ownership overwhelmingly dominant. Men own 79.63 per cent of these enterprises compared to 20.37 per cent owned by women. This pattern remains consistent across rural and urban areas, though male ownership is slightly more pronounced in urban regions (81.58 per cent) than in rural ones (77.76 per cent). In terms of employment, the MSME sector employs 1109.89 lakh individuals, with 844.68 lakh (76 per cent) being male and 264.92 lakh (24 per cent) female employees.
Employment generation
The NSS 73rd round also revealed that the MSME sector generated 11.10 crore jobs across the country, with 360.41 lakh in manufacturing, 0.07 lakh in non-captive electricity generation and transmission, 387.18 lakh in trade, and 362.82 lakh in other services. The micro sector, comprising 630.52 lakh enterprises, provided employment to 1076.19 lakh individuals, accounting for around 97 per cent of total employment in the sector. The small sector with 3.31 lakh enterprises, employed 31.95 lakh people (2.88 per cent); while the medium sector with 0.05 lakh enterprises employed 1.75 lakh people (0.16 per cent) in the MSME sector.
