MSMEs As Large Employment Creators
India's MSME sector comprises 63 million units and has created 111 million jobs, but this sector is plagued by low levels of registration
Micro, small and medium enterprises (MSMEs) provide large employment opportunities at lower capital cost than large industries, but this sector is plagued by low levels of registration. As per the 73rd National Sample Survey (2015-16), India's MSME sector comprises 63 million units and has created 111 million jobs.
Enterprises with turnover not exceeding Rs 250 crore and having investment in plant and machinery not exceeding Rs 50 crore are eligible to register as MSMEs. Registering as an MSME entitles the establishment to receive benefits in the form of government subsidies, easy loan approvals, reduced electricity bills and access to MSME clusters for skill and technology development.
Current data (December 2019) indicate that although MSME registrations are at a meagre 8.3 million (13% of all MSMEs), these registered MSMEs create 46.6 million (42%) jobs. Top registrations are from personal and professional services (10%), textile and apparel manufacturers (9.4%), food and beverage manufacturers (7.9%), wholesale and retail traders (6.6%), hospitality services (6.4%) and other manufacturing enterprises (6.2%).
Recognising the ability of MSMEs to generate large-scale employment and contribute to the nation's GDP and exports, the government is encouraging more establishments to register as MSMEs. Recently, a further simplification in registrations was announced by introducing a new portal called Udyam Registration, which proposes automatic integration with income tax and GST databases.
The author acknowledges the contribution of Divij Sinha, IIHS Urban Informatics Lab, who helped with data visualisation.
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