SCALING MSMES FOR VIKSIT BHARAT

Despite a series of reforms in recent years, formalisation of MSMEs has been impacted by large companies maximising market share, trivialising the benefits available to MSMEs

- By SWAPNIL KOTHARI & DR RUMKI MAJUMDAR

WITH OVER 59 million enterprises powering nearly a third of India's gross domestic product (GDP) and almost half of its exports, and employing 41.8% of its working population, micro, small, and medium enterprises (MSMEs) are the invisible engine of India's growth and employment. As global supply chains pivot toward Asia, many of its MSMEs remain locked in a low-value cycle, discouraged from formalising and subtly coerced into staying informal, despite government policy support intended to foster formalisation and competitiveness.

Sometimes, regulatory leniencies have been extended to ensure MSMEs' survival during challenging times. For instance, the objective of the regulatory body, the Competition Commission of India (CCI), is to protect consumers' interests and ensure freedom of trade. However, the regulatory body, at times, has not strictly applied a few provisions of the Act to MSMEs and instead, has cut them a bit of slack to preserve their existence. A case in point is where the CCI issued a cease-and-desist order against eight firms, which had contravened Section 3 of the Act. These firms had embroiled themselves in cartelisation (which is one of the things that the Competition Act frowns upon, and MSMEs are not immune) by manipulating the bidding process during stressful times of Covid-19 due to limited staff and turnover. They later cooperated in owning up, avoiding monetary penalties under lenient enforcement.