MSME in India: Role in Economic Growth and Impact of the Make in India Initiative

As the lifeline of India's industrial and service sectors, Micro, Small, and Medium Enterprises (MSMEs) are critical to national progress. Spread across diverse sectors, these enterprises produce everything from daily-use goods to cutting-edge industrial components—serving both local markets and global supply chains.

What makes them indispensable? MSMEs contribute approximately 8% to India’s GDP, 45% to the manufacturing output, and nearly 40% of the country’s exports. And they do this with relatively low capital investments while generating substantial employment and returns—making them a crucial pillar in India’s push for industrial self-reliance.

MSMEs: The Backbone of India's Growth Story

MSMEs are vital not just for job creation, but also for rural development, innovation, and inclusive growth. They function in every part of India—from small towns to metro cities—creating local jobs and promoting entrepreneurship among underrepresented communities.

How "Make in India" is Empowering MSMEs

The Make in India initiative, launched by Prime Minister Narendra Modi, rests on four foundational pillars designed to unlock the full potential of MSMEs. These reforms, policies, and infrastructure pushes are aligned with the broader goal of making India a global hub for manufacturing, services, and exports.

Let’s explore each pillar and its significance:

New Processes

To simplify life for entrepreneurs, Make in India advocates streamlined regulations and single-window clearances. These reforms reduce the bureaucratic burden on MSMEs and improve transparency and speed in business registration, compliance, and approvals.

New Infrastructure

For MSMEs to flourish, they need access to modern infrastructure. This includes not just physical connectivity like roads and power but also industrial parks, technology clusters, and digital platforms. Make in India promotes investment in new industrial corridors and upgrades to existing infrastructure, helping small businesses become more competitive.

New Sectors

Make in India has identified 25 priority sectors for focused support—including electronics, defense, automotive, textiles, and construction. MSMEs in these sectors benefit from FDI-friendly policies, government procurement, and targeted financial schemes that drive innovation and productivity.

New Mindset

At the heart of this initiative is a shift in how government interacts with entrepreneurs. Instead of merely regulating businesses, Make in India promotes a facilitator approach—where government actively supports, mentors, and partners with MSMEs to drive national economic transformation.