Written By Puja Bhardwaj
Micro, Small, and Medium Enterprises (MSMEs) play a crucial role in India’s economic growth and socio-economic progress. MSMEs are one of the top job creators, mainly in rural and backward regions. According to the data, there are over 63 million MSMEs across India, accounting for 8% of India’s total GDP, 45% of manufacturing output, and about 40% of exports, standing as the key driver behind India’s economic growth. These firms specialise in niche products and cater to specific market demands, enhancing the country’s export competitiveness and widening its global market reach.
The Contributions of MSMEs in Export
The MSME sector in India is expected to grow remarkably, reflecting India’s rise in the export market. MSMEs give a great push to export promotion by manufacturing a varied range of goods and services—from textile exporters and doll part assemblers to niche chemical manufacturers for the global markets.
According to the latest report, the MSMEs’ exports have grown from ₹3.95 lakh crore in 2020-21 to ₹12.39 lakh crore in 2024-25. The number of MSME exporters in 2024-25 has grown from 52,849 in 2020-21 to 173,350 in 2024-25. In India’s export segment, MSMEs have contributed 45.73% to exports in 2023-24, and next year, it reached 45.79%.
Export Potential and Underperformance
While there is a large population in India, a substantial part of the country remains financially backward. It means limited consumption and purchasing power among them, leading to the effective size of the Indian market being smaller than expected. MSMEs are struggling to ensure their growth due to the high competition and a small market size. Here, export has become essential for MSMEs in India to overcome size limitations and unlock development opportunities.
Over 54 lakh manufacturing MSMEs will benefit from extending their customer base, boosting revenue and profit, diversifying their customer base, and boosting their reputation as a player worldwide. While the opportunities are remarkable, only a small percentage of 0.95% of total MSMEs engage in export. At present, a total of 1.58 crore MSMEs are registered in India, but just 1.5 lakh units are engaged in exporting their goods and services.
Emerging Opportunities For MSME Exports
India’s MSME landscape is reaching the next level of growth, from survival to scale. For a long time, the focus was on protection and relief. Now, it has become more about execution and global competitiveness. Some emerging opportunities for MSMEs include the following:
Today’s manufacturing and services experts are focused on skills. India’s specialisation is remarkable, transitioning towards more skill-intensive exports such as auto parts, electronics, machinery, and pharmaceuticals.
India has not utilised the Lewis curve fully for low-skill manufacturing exports. There has been a competitive advantage in exporting low-skilled goods like apparel, textiles, leather, and footwear. But the country is yet to take advantage of this area.
India is widely known for its huge working-age population and major employment in manufacturing MSMEs. But the low-skilled manufacturing products are just 5% of the total share of global exports. The best part about low-skilled exports is that they boost the merchandise export share without any competition with highly skilled manufacturing for resources. Hence, emerging MSMEs with low skills have the potential to leverage their strengths and grow sustainably.
Among the varied opportunities for MSMEs, some of the major issues of MSME exports include the untapped growth lever and the 60 to 90 days of working capital locked in every export cycle. It is execution costs at 13 to 14% of GDP versus approximately 8% in developed markets.
Frequently Asked Questions
What percentage of India’s exports come from MSMEs?
The MSME sector is a promising landscape for India’s overall development. Presently, its contribution is 30% of India’s total GDP and 45% to exports.
What is the current landscape of MSMEs?
The country’s Gross Value Added (GVA) increased from 27.3% in 2020-21 to 29.6% in 2021-22 and 30.1% in 2022-23, boosting its role in national economic output.
