June 27, designated by the United Nations General Assembly as MSME Day, was celebrated this year too. Globally, MSMEs form the backbone of a country’s progress, especially in developing countries. The day, like other designated days, is primarily meant to raise awareness of the important role played by MSMEs in generating employment and exports, as well as contributing to a country’s GDP. The theme for 2025 was to highlight the role of MSMEs in the achievement of the United Nations Sustainable Development Goals (SDGs).
In India, Udyami Bharat MSME is celebrated on 27 June. MSMEs in India are the second-largest employment generator after agriculture and contribute 30 per cent of India’s GDP, besides collectively accounting for 45 per cent of the country’s exports. Currently, 57 million MSME units are registered on the government’s Udyam platform, launched on 1 July, 2020. Globally, too, MSMEs form nearly 90 per cent of the overall business system, accounting for 50 per cent of employment.
India celebrated the SME Day in various ways. Acknowledging the stellar role played by Indian SMEs, President Droupadi Murmu said that SMEs contribute significantly to GDP and promote innovation at the grassroots level. A robust MSME ecosystem is not only important but also essential for the country’s sustainable economic development. Most importantly, these enterprises generate employment in rural and backward areas.
The President also highlighted the challenges faced by SMEs, including the problem of finance, competition from big corporations, lack of the latest technology, lack of raw material and skilled workforce, limited markets, and delayed payments. Some steps taken by the government to ease some of these vexatious problems were also spoken of, viz, asking PSUs to procure 35 per cent from Micro and Small Enterprises, setting up an online dispute resolution platform, and training rural artisans.
Even so, the main problem of getting timely finance continues to plague the sector. One reason is the lack of security, which most commercial banks insist upon when giving loans. Taking a personal guarantee is one of the prerequisites. Instead of appraising the risks in a meaningful way and treating MSMEs like any other business, as is done in the case of larger corporates, funding for MSMEs is by and large not given its due importance, unlike in the case of larger borrowers. It is true that for banks, one corporate loan may be equivalent to 1,000 small loans; however, loans to smaller lenders provide diversification and spread the risk across several borrowers. Funding exports to enable SMEs to link into the global supply chain is also a challenge.
The Joint Director General of Foreign Trade, speaking at another event organised by PHDCCI, pointed out that the government is working on the creation of a stronger, digital-first, logistics-enabled model that will support MSMEs. Pointing out that five export hubs have been approved, with more in the pipeline, the government aims to scale up these models further. As it is, several MSMEs, especially from Tier 2 and Tier 3 places, are tying up with global e-commerce platforms and building their own brands. Besides, the Government e-Marketplace portal, GeM, is also enabling good business for MSMEs. Over Rs5.40 lakh crore worth of business was transacted in 2024-25 by 10 lakh SMEs on this portal, according to Joint CEO Ajit Pawar, who spoke on the same occasion.
Getting entry into the supply chain is one thing. The next big step, which could really propel Indian products into the big league, will be when Indian MSMEs start investing in building brands. Imagine what the Kolhapuri chappals, which inspired Prada and are selling at over Rs1 lakh as a luxury brand, could achieve if registered as a brand in India. Likewise, there are so many khadi products which could gain immense popularity if they were branded. Branding may not yield immediate gains and may take years, probably decades, to build and maintain. A brand also requires consistency in quality and certain standards to be maintained. There are several artisans across sectors who take a lot of pain and pride in creating works of art. Getting a global market will inspire them to work even harder and improve productivity.
There are several products that are amenable to branding. Bandhgala jackets, a product popular in India and among Indians overseas, are another example that lend themselves to branding. Khadi Bhandar also offers many handmade soaps and hair oils which could be branded and sold through overseas channels. Wooden toys can also be marketed through clusters.
The point is that even as e-commerce platforms are a good channel for feeding global markets, one has to take a long-term perspective on building MSME, Made in India brands.