Sector

MSME

  • Sector Expert

    Shri. Ajay Chaurasia

    Dy Commissioner, Directorate of Industries

  • Sector Expert

    Shri. Neeraj Singh

    Assistant Commissioner Directorate of Industries

  • Invest UP

    Shri. Amit Kumar Mishra

    AGM EV

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INDIA SCENARIO

  • The Micro, small, and medium enterprises (MSMEs) are one of the driving forces propelling the Indian economy towards global greatness. They work silently and continuously for up gradation of skills and understanding of the markets and provide employment for lakhs of youth in each year. MSMEs not only play a crucial role in providing ample employment opportunities but also helped in industrialization of the rural and backward areas thereby reducing regional imbalances assuring more equitable distribution of national income and wealth.
  • As per the Udayam portal, MSMEs employ over two crore people, firmly establishing themselves as the bedrock of the economy. Aided partly by supportive and reformatory government initiatives and technological innovations, the MSME sector has grown exponentially, accounting for ~46% of India’s total exports. Currently, with 6.3 crore MSMEs in operation, the MSME sector contributes 33.4% to India's manufacturing output.
  • As India steadily approaches the threshold of becoming a $5 Tn economy by 2026-27, interest in the nation as an investment destination is soaring. The Indian MSME sector is projected to grow to $1 Tn by 2028. The number of MSMEs in the country is expected to grow from 6.3 crore, to ~ 7.5 crore in the coming times, growing at a projected CAGR of 2.5%.
  • Its many winning advantages encompass a diverse range of investment opportunities across various industries and supply chain ecosystems, including but not limited to textiles, food processing, agriculture, and more. Another distinct advantage that MSMEs offer is the opportunity to invest in enterprises beyond metropolitan cities. Investors can capitalise on the potential of the rapidly expanding rural MSMEs catering to an accelerating consumer base, disposable incomes, and a vibrant domestic market.
  • Moreover, with the relaxation of the FDI policy allowing a 100% FDI inflow under the automatic route for MSMEs and the various tax exemptions and tax holidays that the sector can avail, investments in Indian MSMEs have much to attract astute investors.
  • The role of MSMEs in fostering sustainability and inclusivity in the Indian economy is irrefutable. 20.5% of the MSMEs registered on the Udyam Registration Portal are led by women, accounting for 18.73% of the total employment generated by Udyam-registered MSMEs.
  • To ensure the growth of the sector and for the economy to remain inclusive, equitable, and sustainable, the Ministry of MSMEs has undertaken various initiatives to foster MSMEs that value these goals. For example, the Credit Guarantee Scheme for Micro & Small Enterprises offers a 10% concession in annual guarantee fees and up to 85% guarantee coverage for female entrepreneurs. Meanwhile, the SAMARTH initiative provides more than 7500 women from rural and sub-urban areas with skill development and market development assistance to encourage female entrepreneurship.
  • Another government initiative, Raising and Accelerating MSME Performance (RAMP) was launched in July 2022, under the aegis of the Ministry of MSME. The World Bank-assisted RAMP scheme aims to improve the access of MSMEs to both the global market and credit and foster the sector by accelerating Centre-State collaboration in MSME promotion and development. With an outlay of INR 6000 Cr has been assigned for five years to ensure the implementation, the scheme aims to benefit over 5.5 Lakh MSMEs.

UTTAR PRADESH SCENARIO

  • In Uttar Pradesh, too, the MSME sector serves as a backbone of manufacturing sector with the strong presence of many traditional clusters. The state has a 90-lakh MSME base, which contributes around 14 percent share of India's total MSME count of 6.33 crore. Of the total 90 lakh MSMEs in UP, the Micro industries comprise of 89.64 lakh units, while the small units comprise of 0.36 lakh units.
  • MSMEs in UP are major employment generators, providing jobs to millions of people, especially in the rural and semi-urban areas. This has helped in reducing regional disparities and promoting inclusive growth. Women and marginalised communities, especially, have benefitted from the employment opportunities created by MSMEs. MSMEs in UP provide employment to over 14 million people and the export-oriented nature of many MSMEs has significantly boosted the state’s foreign exchange earnings. In 2022, UP’s MSME exports were valued at approximately $16 billion, accounting for nearly 70% of the state’s total exports.
Type No. of Units registered in Uttar Pradesh
Micro 89.64
Small 0.36
Medium Medium
  • Some of the key MSME sub-sectors in UP include textiles and handicrafts, renowned for traditional crafts like handloom weaving, embroidery, and carpet making, with cities like Varanasi and Lucknow famous for silk saris and chikankari embroidery, respectively. The leather industry in Kanpur and Agra produces high-quality leather goods, contributing significantly to India’s leather exports. The state’s fertile land supports a robust agro-processing sector, with MSMEs engaged in processing and packaging agricultural products, including dairy, fruits, and vegetables. With the rise of digitalization, many MSMEs in UP have ventured into IT services, software development, and digital marketing, contributing to the state’s technological advancement.
  • UP has made substantial progress in branding, marketing, and promotion. The government has launched a Promoting Leadership and Enterprise for Development of Growth Engines (Pledge) scheme that provides private players an opportunity to develop industrial parks in the state. Recently, the government inaugurated the 11th Pledge Park in Jhansi. The state’s efforts to provide financial assistance, enhance infrastructure, and promote innovation have laid a solid foundation for MSMEs to flourish, making them integral to UP’s economic success and positioning them as key players in the global economy.

SECTOR HIGHLIGHTS




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DOMINANT INDUSTRY FORCES

KEY DEVELOPMENT IN THE INDUSTRY

  • The government’s target is to achieve an annual growth rate of 15% in development of MSME industries and to generate employment with an annual growth rate of 15%. To achieve this, the government has launched many special schemes such as the Vishwakarma Shram Samman Yojana, through which the facility of margin money grant and interest grant will be provided to local artisans and traditional entrepreneurs on getting loans from the bank for development of traditional industries. Another scheme, the Mukhyamantri Yuva Swarozgar Yojana is for the educated unemployed youth of the state. Encouraging them to establish an enterprise in the industry and service sectors, the scheme provides margin money grant and interest grant to the beneficiaries. These projects will be synchronized with the Pradhan Mantri Mudra Yojana or Stand Up India Scheme.
  • Additionally, a special provision has been made for SC/ST and women entrepreneurs under the Mulhyamantri Yuva Swarozgar Yojana.
  • In order to give a leg up to the MSME sector, the Uttar Pradesh government launched a unique initiative ‘One District One Product (ODOP) Scheme’, which aims to revive and promote the state’s cultural heritage from the district level itself. The scheme has not only helped preserve and develop endangered local crafts, traditional skills and products of communities, but also secured livelihood for millions of rural people engaged in these activities. The state government has one unique product from each of the 75 districts of Uttar Pradesh and create a product-specific traditional industrial hub, – like the ancient and nutritious kalanamak chawal, the rare and intriguing wheat-stalk craft, world-famous chikankari and zari-zardozi work on clothes, and the intricate and stunning horn and bone work that uses the remains of dead animals rather than live ones. As an initiative centred around promoting and marketing specialised products across districts, ODOP aims to develop its Micro, Small and Medium Enterprises (MSME) sector.

POLICIES & SCHEMES

Capital Interest Subsidy Bundelkhand and Purvanchal region -capital subsidy of 25%, 20% and 15%, Madhyanchal and Paschimanchal region capital subsidies of 20%, 15%, and 10%, respectively SC/ ST and women entrepreneurs - 2% additional, capital subsidy
Infrastructure Interest Subsidy Approved MSME industrial parks/ estates/ flatted factory complex (minimum area of 4000 square metres for flatted factory complexes) projects with area of 10 acres or more, will be eligible for annual infrastructure interest subsidy of up to 50%, subject to ceiling of Rs 2 Crore, annually
Land Use conversion @ 100 % exemption for converting agricultural land to Industrial land of agriculture land development authorities
Stamp Duty MSMEs will be eligible for 100% stamp duty exemption in the Purvanchal and Budelkhand region, 75% in the Madhyanchal and Paschimanchal region except for Gautam Budh Nagar and Ghaziabad (50%) Women entrepreneurs will be eligible for 100% stamp duty exemption in any part of the State
EPF Reimbursement @100% reimbursement for 5 years from the date of commencement of the unit for MSMEs.
Promoting Environment Improvement Measures among MSMEs Fiscal assistance of 50% of the project cost (maximum Rs 10 crore) for establishment of CETPs

KEY INVESTMENT OPPORTUNITIES

  • Leading state in the export of handicrafts, processed food, engineering goods, carpets, readymade garments, and leather products.

  • Famous for the traditional products manufactured by Micro, Small and Medium Enterprises (MSMEs) in the state and possess immense potential for generating employment.

  • Large opportunities for investments and outputs by large players and their MSME vendors to indigenize and/or enable import substitution.

  • A favourable procurement policy complemented by the huge industrial base

  • The State has mandated 25 percent procurement by the state government departments and public sector undertakings (PSU) from the state MSMEs.

  • The state government has fixed a sub-quota of 3 percent and 4 percent for compulsory procurement from the MSME units owned by women and scheduled caste/scheduled tribe (SC/ST)

  • To encourage Indigenous and specialized products in the state, the UP government has launched schemes like ODOP program and policies like the U.P. Micro, Small & Medium Enterprises Promotion Policy 2022 and the Uttar Pradesh Chief Minister Youth Self Employment Scheme 2020.



Important Links

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