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News: Recently, World MSME Day was celebrated on June 27 for giving attention to the MSMEs. Just like any other large businesses in India, they have also contributed to growth and achievements.
About the micro-small and medium enterprises (MSME)
MSMEs are privately owned enterprises with less than Rs. 50crore in investments in plant and machinery and turnover below Rs. 250 crore.
Importance of MSMEs
They are the backbone of the Indian economy. For example, it accounts for over 99% of businesses in India.
They have given valuable contributions to job creation and sustainable development across the world. For example, MSMEs are the largest employer in India outside of agriculture, validated by the fact that MSMEs employ over 11.1 crore people or 45% of all workers.
What are the challenges in the functioning of the MSMEs?
These businesses are the ones that have faced the harshest of environments over the last few years.
(1) The Pandemic-induced disruptions severely impacted MSMEs. They have faced a lack of access to resources
(2) Due to war, they are facing supply shocks and soaring fuel, food, and fertilizer prices.
(3) Further, the ongoing climate crisis is going to become the greatest disruption multiplier of all.
(4) Most MSMEs do not meet today’s standards on productivity, environmental sustainability, health and safety of workers.
(5) There is a high degree of informality, with many enterprises unregistered, and both employers and workers lack awareness of and commitment to comply with labour and environmental laws.
(6) The informal enterprises cannot access formal MSME support and financing nor participate in global value chains that require full compliance with all applicable regulations.
The economic landscape is changing due to digitalisation, greening, and the reorganisation of value chains.
(1) Digitalisation concerns the integration of digital technologies, such as big data, artificial intelligence, and virtual reality, in business processes, also known as Industry 4.0.
(2) “Greening” requires cleantech innovation and entrepreneurship to accelerate the transition to a circular and low carbon economy.
(3) To increase the resilience of supply in response to recent shocks, and other reasons like shift in the production locations in the global value chains across countries and regions.
Measures Taken by the Government and other agencies
The government has launched the Atma Nirbhar Bharat (self-reliant India) and has identified the development of the MSME ecosystem as a top priority for achieving this.
India’s ambitious “Make in India” campaign wants to make India a global manufacturing hub.
The production-linked incentives (PLI) schemes and the recently launched zero effect zero defect (ZED) certification are helping to promote and boost the MSMEs sector.
The UN system in India is supporting these and other MSME development initiatives at the local, state, and national levels.
The government initiatives such as the Digital Saksham and the interlinking of the Udyam, e-Shram, National Career Service (NCS), and Atmanirbhar Skilled Employee-Employer Mapping (ASEEM) portals aim to promote digitalisation in the MSMEs.
At present, together, the Bureau of Energy Efficiency (BEE), and UNIDAO provide energy efficiency advisory services to various MSMEs in different sectors of the MSMEs.
ILO, together with the Federation of Indian Chambers of Commerce & Industry (FICCI) and corporates, are supporting MSMEs in creating and retaining jobs
The Start and Improve Your Business program is helping over a lakh young people across five States launch enterprises.
The Way Forward
To leverage the demographic dividend, India needs to create many jobs, especially for the one million young people entering the labor market every month.
The policymakers should work on creating an environment to fully unlock emerging opportunities in the rapidly changing global value chain ecosystem and maximize the demographic dividend
MSME owners should commit to formalize their businesses, investing in improved productivity, compliance, and most of all, decent work and jobs for India’s aspiring youth.
Source: The post is based on an article “Bringing MSMEs into global value chains” published in the “The Hindu” on 27th June 2022.
