The backbone of the Indian economy, the SME sector makes an immense contribution to country’s GDP and employment landscape. Especially in the past year of economic upheaval, it has shown agility and sustainability through innovation and adaptability. As per a recent survey by Economic Times, 43% of all MSMEs in India are selling their products through online retail stores.
While SMEs undoubtedly suffered a blow in 2020 in the wake of the pandemic, they are fast bouncing back, thanks to the easy availability of SME loans and a recovering economy.
In 2021, what will be this sector’s contribution to India’s economic development? Let’s take a look.
Bringing Equitable Development
The MSME sector has succeeded in reducing the regional imbalances through a more equitable distribution of the nation’s resources, and will continue to do so in 2021. Apart from directly providing for rural areas, this sector has been largely responsible for being ancillary units to the large industries. This is because large industries mostly cater to the developed parts of the country. Through MSMEs, they are able to reach a wider and remote area, which in turn leads to growth and development in these regions.
Increasing Employment Opportunities
The MSME sector is said to be the largest creator of employment opportunities in our country, at a relatively low cost of capital. In comparison to the larger industries, the sector is said to provide 4 times more employment. Employing lakhs of people from even the most backward areas, no wonder that MSMEs are called the ‘Engine of Growth.’ Furthermore, SMEs will also continue to invest in upgrading the skills and training of employees.
Additional Read: Guide for First-Time SME Loan Applicants
Boosting the Manufacturing Sector
There is a wide classification of industries under the MSME sector, the majority of which fall under the purview of manufacturing. As India treads the path towards self-reliance, MSMEs in manufacturing are investing in substantial modernisation, technology up-gradation, and infrastructure development, a trend that will continue in 2021. All of these feats require significant capital. Thanks to the easy availability of MSME loanstoday, small and medium businesses can continue strengthening this industry in the years to come.
Improving Export Competitiveness
MSMEs have the capability to improve trade significantly by exporting a wide range of products internationally. This can boost their profits, which is pivotal in reducing their dependence on direct subsidies and protection from the government. Some of the high performing items exported by the MSMEs are ready-made garments, leather goods, engineering items, and processed goods. In 2021, the percentage contribution of its exports is expected to go up due to reduced regulations.
Additional Read: Benefits of applying for an SME loan by Tata Capital
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