World MSME Day: Key Highlights, Theme, Significance, and Top Schemes

Mark your calendar! World MSME Day is celebrated annually on June 27, a date designated by the United Nations General Assembly. This year's theme, "Leveraging the Power and Resilience of MSMEs to Accelerate Sustainable Development and Eradicate Poverty in Times of Multiple Crises," highlights the critical role these businesses play in building a better future for all. This theme underscores the critical role of MSMEs in achieving the Sustainable Development Goals (SDGs), particularly poverty eradication by 2030.

Why are MSMEs such a big deal?

Think of them as the backbone of the global economy, especially in developing countries. They're everywhere - in manufacturing, services, agriculture, and trade - driving innovation, job creation, and local development.

A whopping 90% of all businesses worldwide are MSMEs, according to the UN. That's right, 9 out of 10! They also contribute a massive 70% of total employment and a staggering 50% of global GDP. In India alone, MSMEs are responsible for about 30% of GDP and employ a whopping 200 million people! These statistics highlight the fundamental role of MSMEs in the economy of numerous countries.

The Economic Contribution of MSMEs in India

In India, home to approximately 63 million MSMEs, these enterprises contribute about 30% to the GDP, over 40% to exports, and have created 110 million jobs. The MSME Ministry's FY23 annual report reveals that 46 million MSMEs were registered, providing employment to 200 million people. This makes India second only to China, which has about 140 million micro and small enterprises.

Challenges Faced by MSMEs 

Despite their significance, MSMEs continue to face substantial challenges, primarily around access to finance. The International Finance Corporation (IFC) reports that around 65 million firms, or 40% of formal MSMEs in developing countries, have an unmet financing need of $5.2 trillion annually. This gap is equivalent to 1.4 times the current level of global MSME lending. Regional disparities also exist, with East Asia and the Pacific accounting for the largest share (46%) of the total global finance gap, followed by Latin America and the Caribbean (23%), and Europe and Central Asia (15%).

Government Schemes Supporting MSMEs

Recognizing the critical role of MSMEs, the Government of India has introduced several schemes to support their growth and development. Here are some notable government schemes that every small business should know about:

Prime Minister’s Employment Generation Programme (PMEGP)

The PMEGP aims to generate self-employment opportunities by providing financial assistance to individuals for setting up new ventures in non-farm sectors. The scheme offers a subsidy of up to 35% of the project cost for rural areas and up to 25% for urban areas. Beneficiaries can avail of loans up to ₹25 lakh for manufacturing units and ₹10 lakh for service units. Eligible individuals include those above 18 years, self-help groups, institutions registered under the Societies Registration Act 1860, and production cooperative societies.

Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

CGTMSE facilitates access to collateral-free credit for MSMEs by providing credit guarantees to financial institutions offering loans up to ₹2 crore. The guarantee cover ranges from 75% to 85% of the credit facility. New and existing MSMEs engaged in manufacturing or service activities, excluding educational and training institutions, agriculture, self-help groups, and retail trade, are eligible for this scheme.

Micro and Small Enterprises Cluster Development Programme (MSE-CDP)

MSE-CDP aims to enhance the productivity and competitiveness of MSMEs by developing clusters. The scheme provides financial support for diagnostic studies, setting up common facility centres, creating infrastructure, and marketing assistance. The government grants up to 70-80% of the project cost. Clusters of MSMEs, state governments, and other implementing agencies can apply for assistance.

Pradhan Mantri Mudra Yojana (PMMY)

PMMY facilitates the provision of loans to non-corporate, non-farm small/micro enterprises. Loans under PMMY are categorized into three products: Shishu (up to Rs 50,000), Kishor (Rs 50,001 to Rs 5 lakh), and Tarun (Rs 5 lakh to Rs 10 lakh). These loans are offered through partner financial institutions like banks, NBFCs, and MFIs. Any Indian citizen with a business plan for a non-farm income-generating activity can apply for a MUDRA loan.

Technology Upgradation Fund Scheme (TUFS)

TUFS aims to facilitate the modernization and upgradation of the textile industry, which includes many MSMEs. The scheme offers a capital subsidy of up to 15% on investments in machinery. Additionally, there is an interest reimbursement of up to 5% for loans taken for technological upgradation. MSMEs in the textile and jute industries engaged in manufacturing or production activities are eligible for this scheme.

Beyond Profits: The MSME and Sustainability Connection 

MSMEs are key players in the circular economy, which focuses on reducing waste and keeping resources in use for longer. This approach aligns perfectly with sustainable development goals, promoting a healthier planet and a brighter future.

World MSME Day is a celebration of small businesses with a giant impact. By supporting MSMEs, we create jobs, foster innovation, and pave the way for a more inclusive and sustainable future. So let's hear it for the MSMEs – the hidden heroes of the global economy!

MSMEs play an essential role in the circular economy, emphasizing sustainable transformation.

As the UN states, "A human-centered approach is central to the evolving 'circular economy,' emphasizing the importance of individuals and communities in driving sustainable transformation."

This approach ensures that new systems align with local culture and institutional needs, promoting inclusive participation and well-being.

World MSME Day serves as a crucial reminder of the importance of small and medium enterprises in driving global economic growth and development. By celebrating their contributions and addressing their challenges, we can foster a more inclusive and sustainable future for all. As governments, financial institutions, and communities come together to support MSMEs, we pave the way for greater innovation, job creation, and economic stability worldwide.

Besides World MSME Day, India also commemorates National Small Industry Day every year on August 30. This day honors the significant contributions of small-scale industries to the nation’s economic growth. On August 30, 2000, the Indian government introduced a comprehensive policy package for small industries, marking the inception of National Small Industry Day. Since then, this day has been dedicated to acknowledging the efforts and accomplishments of small industries across India.

Join Our Thriving Entrepreneurial Community

Follow TICE News on Social Media and create a strong community of Talent, Ideas, Capital, and Entrepreneurship. YouTube  | Linkedin | X (Twittrer) | Facebook | News Letters