MSMEs to Boost India's GDP: Projected Growth to 40% by 2027

MSMEs are expected to contribute around 40% to India's GDP by 2027, up from the current 30%, according to a report by Ugro. This growth is essential for achieving 'Viksit Bharat' by 2047. The formalization of MSMEs through the UDYAM portal and government support are key growth drivers.

Micro, Small, and Medium Enterprises (MSMEs) are set to play a pivotal role in boosting India's Gross Domestic Product (GDP) to around 40% by 2027, a significant increase from the current 30%, according to a report by Ugro.

The report underscores that unlocking the potential of MSMEs is crucial for India to achieve its target of becoming a developed nation, or 'Viksit Bharat,' by 2047. From FY18 to FY22, MSMEs consistently contributed about 30% to India's GDP, and this figure is anticipated to rise to 35-40% by 2027.

A key driver of this growth is the rapid formalization of MSMEs through the UDYAM portal, which has seen a near doubling of registrations each year since its launch in FY21. This formalization process has enabled small businesses to better access government initiatives, including financial support and improved market opportunities.

The report also highlights the increasing role of women-led MSMEs, which are registering in greater numbers on the UDYAM portal. Despite their smaller size, these businesses are contributing significantly to job creation, accounting for one in five jobs generated by MSMEs.

However, women-led MSMEs still face challenges, making up only one in ten rupees of investment and turnover. Additionally, the share of MSMEs in commercial credit remains relatively low at about 6.3% in FY24, although this marks an improvement of 60 basis points since FY19.

The Union Budget for 2024-25 reflects the central government's commitment to supporting MSME growth through a comprehensive package of funding, regulatory reforms, technology support, and initiatives targeted at women entrepreneurs.

The report concludes that increased adoption of technology and digitalization will further formalize the MSME sector, enhancing access to credit and markets, and bolstering India's economic growth. (ANI)

(With inputs from agencies.)