Highlighting the diverse structure of MSMEs across the Indian states and UTs is the main highlight of the report “MSME in India: A Structural Analysis”, launched today by Dr Rajneesh, AS and DC, Ministry of MSME. This report, presented as the first in a series of publications by the Policy Forum of the PHD Chamber of Commerce and Industry (PHDCCI), provides an analysis of the MSME structure in India and serves as a cornerstone for discussions, offering valuable insights into the sector’s dynamics and potential for growth.

Giving insights on the report, Mr. Sanjeev Agrawal, President, PHDCCI explained, “The critical question highlighted in the report is the feasibility of harmonizing and integrating national-level MSME documents into state-level contexts. To address this, the degree of similarity or dissimilarity between national and state-level MSME structures has been assessed.” Using the Jaccard similarity index, the report examines the similarity in the structure of MSMEs at both national and state levels, focusing on three major economic activities: Manufacturing, Trade, and Services.

He added, using 73rd round NSSO 2015-16 data, this report identifies the top 20 dominant activities by number of enterprises in Manufacturing, Trade and Services at the NIC 5-digit level in India. A sector-specific analysis illustrates the substantial reliance on these top 20 activities, accounting for 75% of total activities in Manufacturing, 73% in Services and 77% in Trade.

The thorough analysis unveils that in the Trade and Services sector, the high similarity between National and state-level MSME structures offers a promising avenue to build a national framework. However, the allure of a one-size-fits-all policy must be resisted particularly in Manufacturing which shows more heterogeneity across states. The unique composition of MSMEs in northeastern states and major northern states calls for specialized focus and tailored policies. In essence, this report underscores the need for nuanced, adaptable, and diversified policies that embrace the unique features of the MSME sector across states in order to drive inclusive growth. The path forward lies in blending the pursuit of common goals with the flexibility to adapt to state-specific requirements.

“Most importantly, this report underscores the need to tailor the new National MSME Policy in such a way that it addresses the unique interests and needs of MSMEs in each state and region by considering the diverse structure across the states and regions. This would help to unlock the MSME sector’s full potential”, concluded Mr. Sanjeev Agrawal.