How to grow your MSME Business in India – You might have heard or read this acronym ‘MSME’ used frequently on television business debate shows, newspapers, or otherwise. What is the MSME sector or industry mean in India? What does it do? How does the MSME Industry affect the growth of India? Let’s learn all about it in this post below, and also, how to grow your MSME Business in India.
What is MSME Sector in India mean?
Micro Small and Medium Enterprises in India are called MSMEs. Any type of business entity, partnership firm, proprietorship, limited liability company, limited company, and more can apply for the MSME license under the Micro, Small, and Medium Enterprises Development Act, 2006.
Now there are various rules and regulations, criteria and categories to be termed as MSME which we are not going into right now. If you wish to read about those, please click here.
Why MSME Sector is called the Backbone of Indian Economy?
There is no second thought to it, MSMEs are the backbone of the Indian Economy for many reasons, employment generation being the first and foremost. The Small & Medium Enterprises Sector contributes about 40% of total manufacturing and 34% of total exports and is crucial to India’s economic growth, employment generation, and entrepreneurial development.
MSME contribution to the Indian economy is as follows:
- MSMEs contribute 30% of India’s GDP.
- The share of MSME-related products in total exports from India during 2018-19 is 48%.
- The estimated number of workers in unincorporated non-agriculture MSMEs in the country is 11 crore.
It won’t be wrong in saying that, if Heavy Industries are the vital organs then the MSME sector is like the nervous system of our economy.
India is looking up to be an economic superpower with a supersonic speed and growth perspective. For a country that is in the race to be at the helm of all deciding bodies, and advanced economies employment is the biggest challenge. Indian MSME sector is setting an example for many other nations to build up the inner strength for a self-sufficient nation.
Way to Grow your MSME Business
The Indian MSME sector growth was impacted by the Covid-19 restrictions and international/national lockdowns, geo-political situations, etc. However, it is coming back on track with various upliftment schemes from the central government and heavy industries together.
MSMEs are the largest employment generator and contribute to a large number of jobs in India. To support the exponential Indian growth, these MSMEs should mature into large industries. All the advanced economies have large industries as major employment and technical skill generator sectors.
2. The cluster approach in the manufacturing sector is a great way to boost the MSME sector’s growth. As the Micro Small and Medium Enterprises is a mostly unorganized sector, scattered across the country. Bringing a collective or cluster approach to strengthen the logistics and buyer-supplier chain will be a huge push to the MSME sector. India being an agriculture and services economy, it would be beneficial for small operators to club together and enjoy the synergies of scale in the cluster approach.
3. Online Markets – with physical markets closed due to Covid-19 restrictions, online marketing, and e-commerce has opened new opportunities for the MSME operators. Bringing businesses to e-commerce has given an exponential growth boost to the small and micro-level businesses in India, recently. With the digital push from the central government, this is just the right time to bring MSME markets online with robust marketing practices.
In the recent past, many small businesses found a way to bring their products and services to the world with the help of e-commerce platforms. Local tastes and flavors are dispatched globally to meet the demand from customers across borders or from within the country. E-commerce has transformed the way traditional business was done earlier.
Tier 2 or 3 cities, with cluster manufacturing or export businesses, are also finding their way to e-commerce to satiate the need and demand from lifestyle lovers. Home decor clusters in Noida, decorative glass, and tableware from Firozabad are the most successful examples of impeccable e-commerce marketing strategies.
4. Influencer Marketing – Word of mouth is the best marketing strategy for any business and industry. With the recent shift from traditional to online, most businesses have an online presence. Creating a positive buzz around the business with the help of celebrities, bloggers, influencers, builds up micro and small scale businesses, in the long run. There are numerous success stories of home-maker turning into an entrepreneur with a little push from influencer marketing. Though it is still at the nascent stage in India, growing at a good rate.
5. Easy Financing – A Policy Package for Stepping up Credit to Small and Medium Enterprises was announced in the Parliament on August 10, 2005, in order to achieve a minimum 20% year-on-year growth in credit to the SME Sector by the Public Sector Banks. The objective is to double the flow of credit to the SME sector by 2009-10, i.e within a period of 5years. (see references)
To boost the MSME sector’s growth and expansion, the state and central governments have provided easy financing facilities to small-scale businesses. To scale up to the big and large industries, MSME businesses are supported with various financial schemes and policies.
While these are a few ideas and strategies that have helped various business models in the past to gain momentum and transition into large-scale and profitable businesses. While not all these strategies and marketing tips may work or fit your business requirements. Kindly consider these as only an informational basis.
This post is written as part of Blogchatter’s campaign #ECommerceInnovation. Read more posts in the campaign here.
References – (1) https://www.investindia.gov.in/team-india-blogs/growth-imperative-msme-sector. (2) Easy Financing Ref.
Also read Reasons to invest in Precious Metals, here.
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