Uttar Pradesh Leads MSME Growth: Report The Uttar Pradesh Micro, Small & Medium Enterprises Promotion Policy 2022 offers significant incentives to encourage MSME growth, particularly in backward regions. Capital subsidies range from 10 per cent to 25 per cent, capped at INR four crore per unit, with additional benefits for SC/ST and women entrepreneurs.

The Micro, Small, and Medium Enterprises (MSME) sector in Uttar Pradesh is emerging as a driving force in the state's economic transformation, contributing significantly to employment, exports, and GDP. According to the Uttar Pradesh - State Focus Paper by NABARD, the state houses the highest number of MSME industries in India and plays a crucial role in sectors such as khadi, handicrafts, leather, and agro-based industries. The MSME sector aligns with the Make in India initiative and is vital for fostering local entrepreneurship, reducing migration, and ensuring inclusive growth.

Notably, Uttar Pradesh accounts for 29 per cent of India's artisans, with its handloom industry producing approximately 15 per cent of the nation's total fabric output. The state government's One District One Product (ODOP) scheme aims to promote unique, GI-tagged products for better market reach.

The credit potential assessed for the MSME sector in Uttar Pradesh has seen a dramatic rise, reaching INR 2,91,690.72 crore for 2024-25, a 175.82 per cent increase from INR 1,05,752.64 crore in 2023-24. This surge underscores the government's strong push for industrial growth, particularly through initiatives such as the Global Investors Summit 2023, where 9,000 MoUs worth INR 1.37 lakh crore were signed specifically for the MSME sector.

Despite its impressive growth, the MSME sector in Uttar Pradesh faces several hurdles. A lack of raw materials at competitive prices, limited access to institutional credit, outdated skills and design development, exploitation by middlemen, and a shift towards power looms affecting traditional weaving are some of the major obstacles. Addressing these challenges is crucial for the sustained expansion of MSMEs and the economic well-being of artisans and small-scale entrepreneurs.

Policy boost

The Uttar Pradesh Micro, Small & Medium Enterprises Promotion Policy 2022 offers significant incentives to encourage MSME growth, particularly in backward regions. Capital subsidies range from 10 per cent to 25 per cent, capped at INR four crore per unit, with additional benefits for SC/ST and women entrepreneurs. Micro-units receive 50 per cent interest subsidy for five years, while SC/ST and women-led enterprises are eligible for 60 per cent subsidy, up to INR 25 lakh per unit. Industrial parks with a minimum area of 10 acres qualify for 50 per cent infrastructure interest subsidy, capped at INR two crore annually for seven years. Additional incentives such as stamp duty exemptions and quality improvement measures further support MSME expansion.

With the government's continued support and strategic policies, Uttar Pradesh's MSME sector is poised to play a key role in the state's ambition to become a $1 trillion economy. If the current trajectory of investment and policy backing continues, the MSME sector will not only bolster industrialization but also drive large-scale employment and economic inclusivity across the state.