MSME sector’s share in India’s GDP drops from over 30%: Govt data

The share of 6.3-crore strong Micro, Small and Medium Enterprise (MSME) sector in the country’s gross domestic product (GDP) dropped from 30.50 per cent during the financial year 2018-19 and FY20 to 26.83 per cent during the first year of the Covid pandemic 2020-21, official data showed.While the data for the previous financial year 2021-22 wasn’t shared by Minister of State for MSMEs Bhanu Pratap Singh Verma in his written reply to the question on the contribution of the MSME sector to GDP in the Lok Sabha, the drop in FY21 assumed significance as the government has been looking to boost MSME sector's overall performance in the coming years. 

Former MSME Minister Nitin Gadkari in 2020 had set a target of increasing MSME's share in exports to 60 per cent from 48 per cent and  5 crore additional jobs apart from the jump in GDP share to 40 per cent by 2025.The SME Report 2022 analysed 69 sectors and 147 clusters having revenue of Rs 47 lakh crore, representing nearly a fourth per cent of India's GDP.

           “SMEs in several sectors saw market share loss of over 3% and Ebitda margin erosion compared with fiscal 2020 last fiscal. For instance, the pandemic-induced supply chain disruptions impacted small pesticides manufacturers more. On the other hand, large ones leveraged their global presence to procure raw materials, so could eat up a huge chunk of the SME pie” said Pushan Sharma, Director, CRISIL Research.

 As the MSME sector holds immense potential, the need is to have a right set of policies and enabling framework which guide and support MSMEs to effectively handle their existing problems and venture into new areas. While both the Government and the RBI need to introduce measures for improving access to finance and to promote the growth of the sector thus improving it's GDP share. 

Source : https://www.financialexpress.com/industry/sme/