Medium Enterprises Hold Key To India's Export Growth And Job Creation: NITI Aayog

A new report released by NITI Aayog on 26 May has emphasised the "untapped" potential of India's medium-sized enterprises revealing that although they constitute just 0.3 per cent of the registered MSME sector, they contribute to nearly 40 per cent of MSME exports.

Titled "Designing a Policy for Medium Enterprises," the report identifies this segment as strategic to India's goal of becoming a globally competitive industrial economy under Viksit Bharat @2047.

According to the report, 97 per cent of the registered MSMEs in India are micro enterprises, 2.7 per cent are small, and only 0.3 per cent are medium enterprises.

However, this miniscule percentage in terms of volume, forms the largest portion of export value in the MSME category.

NITI Aayog refers to them as "under-leveraged" and claims that they need "targeted interventions" to enable scalable growth.

The whole MSME sector contributes approximately 29 per cent to India's GDP and 40 per cent to exports.

Nevertheless, the unbalanced structure is the biggest problem, especially since the highest number of jobs per unit is recorded by medium-sized enterprises with a mean of 89.14, followed by small enterprises with 19.11 and micro enterprises with 5.7.

The report makes a number of recommendations that include concessional loans, a working capital funding arrangement based on turnover, and a credit card facility with a pre-approved Rs 5 crore credit limit.

It had suggested a limit of Rs 25 crore per loan based on sector and revenue, and interest rates tied to market interest.

To boost the performance of medium-sized businesses, NITI Aayog has suggested upgrading existing Technology Centres to regional India SME 4.0 Competence Centres to foster the adoption of Industry 4.0 technologies.

It also recommended the establishment of a dedicated R&D cell within the Ministry of MSME and sector-specific testing and certification facilities.

The report urges skilling programme alignment with industry-specific requirements and proposes introducing medium enterprise-oriented modules in existing Entrepreneurship and Skill Development Programmes (ESDP).

Apart from this, the report also recommended the creation of a specialist sub-portal of the Udyam portal with scheme discovery functionalities, assistance in compliance, and AI-based support to help navigate resources more easily for medium-sized enterprises.

Also Read: How Chinese 'Little Giants' Made It, And Lessons For India's MSME Sector