The Scope of Business and Investment Opportunities for Indian SMEs and Manufacturers

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      Small and medium-sized businesses (SMEs) are the lifeblood of the Indian economy and one of the main forces behind its industrial sector. Not only do they make up one-third of the nation’s GDP, but they also serve as the main employers of a sizeable portion of the people, notably in the non-formal sector. By giving economically disadvantaged sections of society work possibilities, they considerably contribute to the socioeconomic growth of the nation.

      The industry has grown to be among India’s most active and vibrant during the last few decades. In order to meet the demands of both the local and global markets, it is aggressively extending its area of influence across multiple economic sectors by producing and offering a wide range of goods and services.

      Employment Opportunities

      The manufacturing industry and SMEs are major contributors to the nation’s Economy, and over the next 10 years, they might contribute more than half of all jobs created. It is crucial to integrate unregistered informal Firms into the formal SME ecosystem. The advantages and direct benefits for SMEs provided as growth incentives will promote registration and involvement in the growth opportunity.

      Usually, by joining the industrial ecosystem and serving as auxiliary units for major enterprises to support the system’s growth and development, the SME and manufacturing sectors may give more job prospects at a relatively lower capital cost, especially in rural and isolated places.

      During the next ten years, our nation has to produce 10 million to 15 million new jobs annually to give its citizens gainful work. Manufacturing and SME sectors have a huge impact on job creation and the expansion of the Indian economy. One of the main forces for India’s shift from an agricultural to an industrialized economy is the sector.

      A significant portion of industrial units is also accounted for by these industries. To maintain balanced and stable total economic growth, it is also crucial to ensure that the industrial, agricultural, and service sectors all experience enough growth.

      There is a notable discrepancy in the growth of businesses in the services and manufacturing sectors, and the present expansion of SMEs and the manufacturing sector is not consistent. For a balanced economic forecast, actions must also be done to narrow this disparity.

      Also Read: The Santander SME platform leverages Salesforce

      Promotion of FDI

      India has one of the most liberalized foreign direct investment (FDI) policies in the world, with several industries allowing 100% FDI under the automatic method. The SME sector is subject to the FDI policy in the same way. A liberalized FDI policy should be implemented to guarantee that, along with attracting investment, the nation also imports modern, cutting-edge technology to increase overall productivity and the competitiveness of the SME sector.

      Multinational corporations will be drawn to the country by the investor-friendly FDI policies, which will hasten employment growth, raise tax revenue, and boost overall productivity. Nearly all rising economies have policies and investment plans that are partially focused on luring major multinational corporations to set up shops in their nation in order to strengthen their economies. Also, these activities may quickly lead to a major increase in the percentage of large enterprises.

      The Market size of SMEs in India

      During the past several decades, the SME sector—which includes IT, manufacturing, infrastructure, services, food processing, packaging, and chemicals—has emerged as the Indian economy’s most active and dynamic development driver. The industry, which employs 60 million people, generates 1.3 million new employees annually, accounts for 40% of India’s exports and 45% of its industrial production, and it produces more than 9,000 high-quality goods for domestic and foreign markets.

      Throughout the country, there are 30 million SMEs, and 12 million additional workers are anticipated to enter the SME sector over the next three years, according to the MSME report for FY 21–22. Also, the industry is expanding at an 8% annual pace. SMEs are anticipated to play a crucial role in areas including e-commerce, food processing, defense, pharma, security, etc. as the Indian economy is predicted to reach $5 trillion by 2025 and revolutionary economic changes begin to take effect.

      Promoting SME Clusters

      A cluster is often a collection of businesses that are manufacturing the same or comparable goods and services, and are situated in a recognizable, and to the greatest extent possible, continuous region. Policies in our nation should support SME clusters in industries including transportation, food processing, textiles, and pharmaceuticals.

      To increase the productivity, competitiveness, and capability of SMEs and their collectives across the nation, the Center has selected the cluster development method as a major strategy. These clusters can work as one large organization, utilizing scale and breadth to increase output and employment inside their respective clusters.

      Also Read: Enabling SMEs to scale up in a challenging world: FE SMExports Summit LIVE Updates

      Schemes for SMEs in India

      Businesses have benefited from a few central government programs. Let’s examine these plans in further detail:

      1. The “Made in India” project of the Central government has been instrumental in promoting enterprises and encouraging Indian SMEs to produce, develop, and assemble goods that are created in the nation.
      2. Financial support for SMEs participating in the Zero Defect & Zero Impact (ZED) Certification Scheme: The scheme’s goal is to implant ZED principles in Indian MSMEs’ manufacturing. With this program, the government provides MSMEs with up to an 80% subsidy.
      3. The Khadi and Village Industries Commission (KVIC) created the Prime Minister’s Employment Generation Initiative, a program designed to fund MSMEs.
      4. Credit Guarantee Trust Fund for Micro & Small Businesses (CGTMSE): This program was put in place by the Center to address the funding problems Indian SMEs faced and offers collateral-free loans to private individuals, micro-enterprises, and small businesses.
      5. To help progress technology and encourage creativity among Indian SMEs, the federal government has launched a number of programs in an effort to better the circumstances of MSMEs in India. Moreover, it supports initiatives like ASPIRE (rural industry & entrepreneurship), the National Manufacturing Competitiveness Program (NMCP), and innovation. These central government programs aid Businesses in overcoming obstacles including funding and technology.

      What’s coming up?

      The manufacturing and SME sectors are the backbone of a strong national economy, and their capacity to boost demand, develop the competition, foster innovation, and create employment makes them an essential component of the economic system. So, putting emphasis on their growth is essential for the nation’s future.

      The recent announcement by the government to contribute 15% of the equity in the listing of new SMEs through a government pool is a positive move. We need more of these kinds of initiatives to demonstrate that the Indian government fully supports SMEs.

      The government’s support for SMEs and the industrial sector, particularly in the current context, can be crucial in supplying capital to the productive sectors of the economy. By relying more heavily on capital market financing, SME development will be less susceptible to short-term setbacks in the long run and the growth momentum will be able to continue for a considerable amount of time.


      The SMEs have the potential and ability to advance the Indian economy to new heights due to their cheap investment needs, operational flexibility, and capacity to create the necessary indigenous technologies. Envision an India where the SME sector has the freedom to maximize its growth propulsion, resulting in a major acceleration of the country’s overall growth. It’s also critical for India’s SMEs to improve the standard of their product offerings and pass advantages on to the final customer.

      Yet, SMEs confront a number of difficulties that limit their ability to develop. In order to solve the issues encountered by SMEs, it is the duty of the Indian government to develop sensible policies and put them into practice. The government should also provide a variety of options for funding SMEs. They should also be skillfully and technologically enhanced. To capitalize on SMEs’ capabilities going forward, a well-designed package of support is required. The government should begin putting the aforementioned plans into practice in order to improve SMEs’ export focus and production potential.

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