Government Schemes for Development of MSMEs in India

Abstract

For socio economic development of the country like India, the MSME sector play crucial role and become backbone of country’s economy. Employment, Exports and GDP growth of the country is directly influenced by the contribution of this sector. This sector provides employment to around 26 crore peoples with the help of more than 7.34 crore MSME’s and become vital component of Indian economy. It further contributes in entrepreneurship development and innovation with the help of digitalization, financial inclusion and supporting government policies. Moreover, this sector also facilitates Indian government to achieve the goal of sustainable development and become number one economy in coming decades. The concept of MSME was first introduced in the year 1951 under industrial (Development and Regulation) Act, 1951 and reshaped in present structure with the help of Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. In country’s Gross Value Added the share of MSMEs increase from 27.3 % in the year 2020-21 to 30.1% in the year 2022-2023. Both the number of exporting MSMEs and export from MSMEs also increased manifold during 2020 to 2024. Despite all above achievements this sector suffers from problems like inadequate formal credit and limited access to financial support. Lack of skilled labour, inadequate infrastructure, absolute technology, competition, limited market access, climate change and sustainability issues are main hurdles in progress of this sector. Above all lack of formalization leads to hurdle in accessing formal credit. To overcome above problems huge initiatives are taken by Indian government in the form of both financial and non-financial schemes like Pradhan Mantri MUDRA Yojana (PMMY), StandUp India, PM Vishwakarma Scheme, Prime Minister’s Employment Generation Programme (PMEGP), Special Credit Linked Capital Subsidy Scheme, Credit Guarantee Schemes, and Scheme of Fund for Regeneration of Traditional Industries (SFURTI) etc. To study government initiatives for MSMEs sector in India this research article has been planned. This research article also highlighted latest trends and how government efforts help to promote sustainable growth in this sector. Mainly secondary data has been considered to frame this paper.