MSMEs Can Make Or Mar ‘Make In India' Initiative

The fulcrum of the ‘Make in India’ programme is the micro, small and medium enterprises (MSMEs) segment and, as of now, the MSMEs are thought of only as an adjunct. But that is slowly changing, explains R Chandrakanth

- R Chandrakanth

How did China become the ‘factory of the world’? It had and has plenty of cheap labour, abundant raw materials, lax environmental rules and focused entrepreneurs to capture markets. And in the late 1970s, it embraced a series of market reforms, despite being a communist state, and that was the beginning of its journey to becoming a manufacturing superpower. It not only established special economic zones with market-friendly rules but also gave a solid platform for the small and medium enterprises (SMEs) which over the years have consolidated their position.

As per research firm Statista, each year about 5 million SMEs get added to the list in China, representing at least a 10 per cent year-over-year growth rate. In 2019, the number of SMEs was estimated to be over 38 million. On the other hand, India has 63.3 million MSMEs. Wait, here is the catch, of the 63.3 million, 99.4 per cent (that is 63 million) are micro-enterprises while 0.52 per cent (3.31 lakh) are small enterprises and 0.007 per cent (5,000) are medium enterprises. Of this number, those in the realm of defence manufacturing is minuscule, one because the defence sector is just opening up for new businesses and two the private sector does not consider defence production as a lucrative business, besides the severe bureaucratic obstacles it has to face. The present dispensation is trying its best to create an eco-system wherein MSMEs will have a major role to play in the ‘Make in India’ initiative.

Pandemic derails MSMEs