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The pandemic has hurt small businesses much more than their larger counterparts and these companies seem eager to avail themselves of the aid offered by the Centre. This is reflected in the surge in the number of MSME registrations between July 1, 2020 and February 8, 2021. As many as 21,25,844 MSME units registered themselves on the new portal, Udyam Registration, in this period.
Maharashtra was in the lead, registering 4,96,204 new MSMEs followed by Tamil Nadu with 2,32,275 MSMEs. Interestingly, the two States have also registered the maximum number of MSMEs in the last five-and-half years.
The impetus for MSME registration came after the launch of the registration portal, Udyam Registration, by the Ministry of MSME on July 1, 2020. This also followed the enactment of a new definition of MSMEs.
Why the jump
Prashant Girbane, Director-General Mahratta Chamber of Commerce, Industries and Agriculture, said the MSME registration process has become easier compared to earlier. “All MSMEs must register on the portal as it is the first step towards getting formal recognition which will facilitate receiving the credit from formal institutions. MSMEs need about ₹50-lakh crore credit and the sector is currently getting only about ₹17 lakh crore of formal credit, the balance being expensive informal credit,” said Girbane. Registration also helps MSMEs benefit from ongoing and future schemes from the government, he added.
The Government has taken a number of initiatives within the Covid-19 relief package under Atmanirbhar Bharat Abhiyan for providing impetus to the MSMEs. ₹3-lakh crore Collateral Free Automatic Loans for business, including MSMEs, were announced by the government with ₹20, 000 crore subordinate debt for stressed MSMEs. The government also announced ₹50,000 crore equity infusion through MSME Fund of Funds. The decision of not calling global tenders for procurement up to ₹200 crore may also have pushed the MSME registration number upwards.
The leaders
Maharashtra is the only State which has registered over 4 lakh MSMEs since last July and Tamil Nadu the only State to register more than 2 lakh MSMEs. Gujarat, Rajasthan, Uttar Pradesh and Karnataka have registered more than 1 lakh MSMEs during the post-Covid-19 outbreak.
In the last five-and-a-half years (since September 2015 to June 30, 2020) 1,02,32,468 MSMEs were registered in India out of which 19 per cent (19,78,536) MSMEs were registered in Maharashtra and 11 per cent (11,06,628) in Tamil Nadu. Uttar Pradesh (9,70,794), Madhya Pradesh (9,66,981) and Bihar (9,38,498) are among the top five to register maximum MSMEs in the five-and-half-year period.
The MSME sector contributes significantly to the economy in terms of Gross Domestic Product (GDP), exports and employment generation. According to the government, the MSME sector contributes 30 per cent to the GDP, and the mission is to take it up to 40 per cent. In the export sector, the contribution of MSMEs is 48 per cent and the government wants to take up it to 60 per cent.
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