The Editorial Analysis: Bringing MSMEs into Global Value Chains

MSME in India: Relevance

• GS 3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

MSMEs in India

• Micro-, Small and Medium enterprises (MSME) account for over 99% of businesses in India.
• MSMEs are the largest employer in India outside of agriculture, employing over 11.1 crore people, or 45% of all workers.
• The disruption of the pandemic severely impacted MSMEs, especially those in the services sector.
• Renewed war, supply shocks and soaring fuel, food and fertilizer prices presented a host of new threats for these privately owned enterprises.
• Climate crisis has been impacting the MSMEs adversely, making it the greatest disruption multiplier of all.

Issues with the MSME sector

• Most of the MSMEs do not meet today’s standards on productivity, environmental sustainability, and health and safety of workers.
• High degree of informality in the sector, with many enterprises unregistered, and both employers and workers are lacking awareness of and commitment to comply with labour and environmental laws.
• Informal enterprises cannot access formal MSME support and financing nor participate in global value chains that require full compliance with all applicable regulations.
• 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.

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Steps taken for the MSME sector

• India’s “Make in India” campaign aims to catapult the country up the manufacturing value chain to position itself as a global manufacturing hub.
• Initiatives such as the production linked incentives (PLI) schemes and the recently launched zero effect zero defect (ZED) certification are helping to promote and boost the sector.
• 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 show the promise of targeted digitalisation schemes.
• UNIDO (United Nations Industrial Development Organization) provided energy efficiency advisory services to 695 MSMEs in 23 clusters covering brass, ceramic, dairy, foundry and hand tool sectors.
• To increase the resilience of supply in response to recent shocks, production locations for global value chains are increasingly shifting and diversifying across countries and regions. To leverage this opportunity, UNIDO is spearheading the notion of manufacturing excellence.
• The Prime Minister’s Employment Generation Programme (PMEGP) is also creating opportunities for self-employment and micro enterprises, with over 7 lakh micro enteprises assisted in becoming economically viable.

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