Role of MSMEs in Economic Growth of India

Micro, Small, and Medium Enterprises (MSMEs) form a crucial pillar of the Indian economy, contributing approximately 30% to the country’s Gross Domestic Product (GDP), 45–46% to total exports, and generating employment for over 110 million people across 63–73 million enterprises. Their diverse presence spans rural and urban regions, encompassing manufacturing, services, and trade, and playing a pivotal role in regional development, industrialization, and innovation. This review paper examines the role of MSMEs in India’s economic growth using secondary data from government reports, academic studies, industry publications, and reputable databases. The analysis explores the sector’s contributions to GDP, employment, exports, and entrepreneurship, while also identifying the structural challenges that constrain its potential. Key government initiatives, policy measures, and success stories are synthesized to provide a comprehensive understanding of the sector’s trajectory. The findings reveal that while MSMEs have significant growth potential, persistent barriers such as limited access to finance, technological gaps, infrastructure deficiencies, and regulatory complexities limit their contribution. The paper concludes with recommendations for strengthening the sector through targeted policy interventions, digital transformation, skill development, and enhanced global market integration.