MSME contribution to India’s GDP lags pre-pandemic highs, shows data

The share of micro, small and medium enterprises (MSME) in India’s gross domestic product (GDP) in 2021-22 was 29 per cent, lower than the sector’s pre-pandemic highs.  

The share of MSMEs in the country’s total output, in terms of gross value added, touched 31 per cent in 2018-19 before declining during the pandemic, as per data tabled in the Parliament on Monday. (Chart 1)

About $200 billion worth of MSME products were exported in 2022-23, but their share in India’s overall exports declined to a five-year low of 44 per cent. MSME products made up about half of all exports in 2019-20 before the pandemic. Since then, the share has declined. India’s overall exports increased by 44 per cent in the same period– from $313 billion in FY20 to over $450 billion in FY23. 

 

Meanwhile, over 13,000 MSMEs shut down in FY23, the highest in the last four years. This decline in the MSME sector’s contribution to the GDP and exports is contrary to the targets set by the government. In 2020, Union Minister Nitin Gadkari said that the government aims to increase the MSME contribution to the GDP from 30 per cent to 50 per cent and from 49 per cent to 60 per cent in exports in five years. Since 2020-21, over 123 million people have been employed in the sector, most of them in Maharashtra, Tamil Nadu, Uttar Pradesh, Karnataka and Telangana.

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