The Government of India introduced the term Micro, Small and Medium Enterprise (MSME) in agreement with the MSMED (Micro, Small and Medium Enterprises Development) Act, 2006. The MSME term is initiated and run by the ministry of MSME are bodies that are engaged in the manufacturing, production, processing and preservation of goods and commodities.
Medium businesses, small companies and corporations are the spine of the Indian economy. If we focus on the recent data, more jobs are generated by small firms as they are the major source of economic growth, national prosperity and innovation.
The statistics not only highlight what works but also focus on the future direction and information that will help the people who are looking to start a business.
MSME Statistics
96% of the industrial units belong to small companies in the Indian economy. The small companies account for 40% of the nation’s overall industrial production and 42% of all Indian exports. Small companies also offer various opportunities in the rural and urban areas of the country. The Indian economy generally experiences unemployment and small firms have helped increase the employment chances for the people.
In India, 7.56 lakh employment was created, home to 75,000 recognized start-ups, 12% cater to Information Technology services, 9% of the healthcare and life sciences, 7% to education, 5% to commercial and professional services and 5% to agriculture. Over the last six years, there has been a 110% yearly increase in the creation of jobs.
The most common way to classify enterprises is the number of people employed. In the Indian economy, small businesses are the second largest employment providers. Less than 250 individuals are working in small and medium-sized enterprises. Less than 10 employees work for micro-enterprises, small businesses have a range of 10 to 49 employees and medium-sized businesses with a range of 50 to 249 employees. 250-plus people are employed by large enterprises.
Small Business Job Creation
India has witnessed rapid growth in start-ups. According to the Ministry of Commerce and Industry, the recent start-ups of around 10,000 were approved in 156 days in opposition to the initial 10,000 which got approved in 808 days. Also, the Tier-2 and Tier-3 cities are said to account for 49% of the start-ups.
MSMEs created 120 million jobs across all industries in India. Micro and small enterprises play an important role in the economy because of it and 33% account for India’s GDP. Medium-sized enterprises only consist of 1% of MSMEs compared to micro firms for about 4.5% and MSMEs for over 90%.
Industry Specific
MSMEs are very essential as they create a lot of job opportunities at a relatively lower capital cost than large industries in India. Additionally, they help to industrialize underdeveloped and rural areas, which ensures a more fair distribution of income and wealth across the country and reduces regional disparities.
MSME Statistics – State Specific
According to India Brand Equity Foundation, as of August 20, 2023, Maharashtra state has the maximum Udyam registrations with 32.76 lakh units, followed by states, Tamil Nadu, Uttar Pradesh, Gujarat and Rajasthan.
MSME Forecast
The National Sample Survey (NSS), according to the 73rd round, which was done between the years 2015 and 2016, the Indian government plans to increase the number of jobs in the MSME sector by 5 crore by 2025 from the present level of 11.10 crore.
As of December 2022, approximately 1.28 crore MSME registered industries employed 9.31 crore people including 2.18 crore women employees, based on the most recent data from the portal of Udyam.
MSME Leading Employment Sectors
The MSME sector generates 360.41 lakh jobs out of the 11.10 crore jobs. The jobs mainly belong to the manufacturing sector, in the rural and urban areas, with 387.18 lakh jobs in trade and 362.82 lakh jobs in other services across the country. The MSMEs that were founded in the year 2022, employed more than 1 crore people.
MSMEs in India
There are a total of 633.9 lakh MSMEs in India. In India, over 99% of total MSMEs qualify as micro-enterprises that make up to 630.5 lakh enterprises. There are a total of 3.3 lakh businesses that qualify as small businesses i.e. 0.5% of all MSMEs and just 0.05 lakh qualify as medium businesses that sum of 0.01% of all MSMEs. The rural areas majorly consist of 324.9 lakh businesses, while urban areas have 309 lakh businesses.
Types of Ownership of Enterprises
There are 633.88 MSMEs in total and 608.41 lakh MSMEs were proprietary concerns. Men predominated in proprietary MSME ownership which resulted in male holdings of 79.56% of micro businesses, 94.74% for small businesses and 97.63% for medium businesses. On the other hand, female ownership is 20.44% for micro businesses, 5.26% for small businesses and 2.77% for medium businesses.
Urban and Rural Areas Employment Distribution
There was no discernible divergence from this pattern in both urban and rural areas. While in urban areas, the prevalence of male-owned businesses was slightly higher than in rural areas.
Generation of Employment – Industry Wise
In the creation of jobs, the food industry tops, employing 4,80,000 people followed by non-metallic mineral goods, employing 4,50,000 people and then metal products which employed 3,70,000 people. All these industries are on top in terms of creating employment opportunities for the people.
Generation of Employment – Other Industries
Industries including those of machinery parts except electrical parts, chemicals and chemical products, paper products and printing, wood products, basic metal industries, hosiery and garments, rubber and plastic products and repair services together provide 49% of jobs which is less than 5% of the total contribution came from all other industries.
Rural Employment Distribution
In rural areas, products other than metals were responsible for 22.7% of employment creation. 21.1% of the market is occupied by food goods, followed by 17.5% of wood products, chemical products and chemicals.
Urban Employment Distribution
In urban areas, metal and food products together sum for nearly identical 22.8%. The combined employment of 26.2% comes from the industrial sector of chemicals and chemical products, non-electrical machinery parts and non-metallic mineral products. 33.6% total share comes from metal products, paper products and printing and machinery and parts other than electrical rank top three in metropolitan areas.
Small Business Ownership Statistics
The GDP is significantly raised by overall manufacturing output which contributes to 33.4% and manufacturing itself sums to 6.11%. The service sector contributes 24.635. Worldwide, 67% of the small business owners surveyed showed that they make up to half of the annual revenue from internet sales channels and 37% are reported to make 51-100% of the revenue.
61% globally reported using online stores or websites or even a combination as their sales channel. 65% of Indian respondents said they make half of the revenue and 36% make over 50% of their revenue from online sales.
Bottom Line
Small businesses can benefit from looking at business statistics. Not only that but the data provide a general business climate and the statistics can be used as leverage to enable businesses to make better decisions in the future.
The data direction can also lead start-ups and small enterprises to plan their outcome in a higher standard manner that will help them sustain and make a profit. While the data can be interpreted and applied differently by businesses, one thing is for sure it will help the small businesses boost their business.
