MSMEs: India's 99% opportunity

The recent spectre of 50 per cent “Trump tariffs” targeting key Indian export sectors — particularly textile, sea food, and gems and jewellery — has generated understandable anxiety across several geographical clusters.

- TULSI JAYAKUMAR

The anticipation of a financial squeeze on micro, small, and medium enterprises (MSME5s) in Surat, where 80 per cent of diamond-export units are concentrated, and in Tiruppur, where garment exporters face the potential of cumulative duties soaring over 61 per cent, is a genuine crisis. These tariffs, which are seen to affect sectors that account fora significant 25 per cent of India’s exports to the United States, are a palpable threat to firms with limited margins and pricing power, compelling them “to the wall”.

This immediate distress, however, must be framed against the colossal, untapped potential of the MSME ecosystem. The national dialogue and the media focus, currently dominated by the grief of the afflicted, risks missing the strategic opportunity presented by the vast, non-exporting majority.

The number of exporting MSMEs, despite a commendabletreblingin the last four years, was a meagre 173,350 in May last year. When viewed against the 73 million-strong MSME base, this figure represents a minuscule 0.236 per cent. Put simply, the enterprises generating nearly half of India’s exports (45.79 percent precisely) are less than one-quarter of 1 percent ofthe MSME base. The real economic lever — the engine of future export-led growth — is the remaining enterprises, which are serving only the domestic market or operating in the informal economy.

The geopolitical invitation and the 99%