Faster economic growth requires increased share of the manufacturing sector in GDP, particularly of MSMEs. Comment on the present policies of the Government in this regard.

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MSME sector contributes “nearly one-third to India’s GDP” and is a “key pillar” of growth. However, the share of manufacturing in GDP has remained stagnant at 17% since the last 3 decades.

Importance of increasing the manufacturing share (especially MSMEs)

Strong employment multiplier: MMSME employes over 20Cr people

Better capital-output ratio than large heavy industries.

Inclusive industrialisation: Eg- 20% are MSMEs are owned by women

Global value-chain linkages: MSMEs account for 45.7% of India’s total exports

Structural transformation: A higher manufacturing share signals shift towards higher-productivity sectors.

Present policies of government to boost MSME manufacturing

Improve infrastructure and logistics – Gati Shakti Program, National Logistics Policy

Production Linked Incentive (PLI) Scheme to attract investment and boost domestic manufacturing.

Ease of doing business through labour reforms. Eg- 4 labour courts

Over 2.5 lakh MSMEs onboarded on GeM for direct government procurement.

MSME SAMADHAAN portal for grievance redressal related to delayed payments.

Udyam Registration system to access government benefits and schemes.

Issues

Missing middle problem – 95% Micro Businesses

Slow to transition to advanced technology. (Ficci-Mckinsey Report)

Infrastructure Deficiencies –

Multimodal connectivity gaps.

Power outages, weak water supply, and poor transport networks.

Regulatory & Policy Bottlenecks

Land acquisition delays

Manufacturing MSMEs face 1,450+ compliances annually

High compliance cost per MSME

Limited Access to Finance (only 14% out of 64 million)

Recommendations of UK Sinha Committee must be implemented to make India the global manufacturing hub