The Micro, Small and Medium Enterprises (MSME) sector is a very important piece of India’s legacy economic model and a part of the critical supply chain for products and services. This sector is considered as the job creator and plays a crucial role in providing large-scale employment and industrialization of rural and backward areas. As per the National Sample Survey (NSS) 73rd round, in 2015-2016, there were around 633.8 lakh unincorporated non-agriculture enterprises in the country which are dealing in different economic activities providing employment to 11.10 crore workers. In this article, we will focus on the Importance of MSME. You can also Register MSME online with Legal Raasta.

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Importance of MSME

MSME has introduced in the year 2006 in India. There are still some service sector that was not yet included in this sector was included in the definition of the Micro, Small and Medium-sized Enterprises making a historic change to this Act. Therefore leveraging the scope of the sector even now government simplified the MSME Registration online with the paperless work.

The further Importance of MSME in India has been described below:

  1. It creates large-scale employment: Enterprises that are inclusive in this sector require low capital to start up new business. Moreover, it creates a vast opportunity for the unemployed people to avail. India produces about 1.2 million graduates per year out of which the total number of engineers are around 0.8 million. There is no economy so far that could provide that large number of freshers in one year only. MSME is the boon for the fresh talent in India.
  2. Economic stability in terms of Growth and leverage Exports: It is the most significant driver in India contributing to the tune of 8% to GDP. Considering the contribution of MSME to manufacturing, exports, and employment, other sectors are also benefitting from it. Nowadays, MNCs are buying semi-finished, and auxiliary products from small enterprises, for example, buying of clutches and brakes by automobile companies. It is helpful in creating a linkage between MSME and big companies even after the implementation of the GST 40% MSME sector also applied GST Registration that plays an important role to increase the government revenue by 11%.
  3. Encourages Inclusive Growth: The inclusive growth is at the top of the agenda of Ministry for Medium, and small and Medium-sized enterprises for several years. On the other hand, poverty and deprivation are a deterrent to the development of India. Besides, it includes marginalized sections of a society which is a key challenge lying before the Ministry of MSME.
  4. Cheap Labor and minimum overhead: While in the large-scale organizations, one of the main challenge is to retain the human resource through an effective human resource management professional manager. But, when it comes to MSME, the requirement of labor is less and it does not need a highly skilled laborer. Therefore, the indirect expenses incurred by the owner is also low.
  5. Simple Management Structure for Enterprises: MSME can start with limited resources within the control of the owner. From this decision making gets easy and efficient. On the contrary, a large corporation requires a specialist for every departmental functioning as it has a complex organizational structure. Whereas a small enterprise does not need to hire an external specialist for its management. The owner can manage himself. Hence, it could run single-handedly.
  6. The main role in the mission of “Make in India”: The signature initiative by the Prime Minister of India “Make in India” has been made easy with MSME. It is taken as a backbone in making this dream a possibility. In addition, the government has directed the financial institution to lend more credit to enterprises in the MSME sector.

Read more: Areas of growth for small business


MSME is the backbone of the Indian economy. This sector has proven the instrumental in the growth of the nation, leverage exports, creating huge employment opportunities for the unskilled, fresh graduates, and the underemployed. It also extended the opportunities to banks for giving more credit to enterprises to MSME Sector. The government should take the special care by addressing the importance of MSME in terms of providing more and more MSME Registration advantages by implementing better regulations and enable financial institutions to lend more credit at less interest rate for sustainability of this sector.

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