MSME Industry: Incubating India’s Growth Story in its Villages
Sunita*, a former rural migrant worker, would often travel to Kodagu district to work as a plantation labourer in the coffee estates. This made her suffer the brunt of seasonal employment due to a lack of stable income. Without a consistent source of income throughout the year, Sunita* struggled to meet her family’s needs and faced hardships in accessing basic amenities such as healthcare and education.
As India celebrated the United Nations declared International Micro, Small, and Medium-Sized Enterprises (MSME) Day themed at “Future-ready MSMEs for India@100” on the 27th of June, 2023, Sunita’s story sheds light on the plight of many rural women facing similar obstacles due to the seasonal and unskilled nature of their employment. Not just women, but also other marginalized members of our society seek the financial independence provided by MSMEs, which contribute up to 90% of business worldwide. This emphasizes the need for sustainable solutions and social support livelihood systems from government, corporates and civil society organizations.
In the India of the 21st century, MSMEs, especially those owned by women, are emerging as a powerful force, driving innovation, creating employment opportunities, and contributing to economic growth at the national and global levels. These women entrepreneurs demonstrate remarkable resilience, determination, and creativity in establishing and growing their businesses.
Policy think tank GRAAM’s WE Mill project has provided a platform to rural women in Bilikere village of Karnataka to demonstrate such resilience and entrepreneurship abilities. Conceptualized in 2019, WE Mill has showcased the possibility of rural wealth creation and sustainable livelihood opportunities for these women.
However, the road to this success was not easy. From searching for potential field partners to raw materials, to the creation of finance cells; from setting up of marketing centers to the dissemination of entrepreneurial awareness, GRAAM’s team worked tirelessly, conducting more than 20 meetings across 12 villages, 95 Self-Help Groups and 363 women members. At the same time, CSIR-CFTRI officials were contacted for technological support.
Numerous challenges are faced in the incubation of an MSME project. Access to finance, building the right skill set and providing marketing support are some of these challenges. There can be a lot of delays due to regulatory compliances and allied issues. A Senior Manager, Programs at GRAAM states, “There is a requirement to sanction separate power distribution channels, getting an electricity connection itself can take up to 6 months.” Apart from this, he also mentions the transportation and mobility issues in rural areas, which even the present government in Karnataka is keen on addressing.
The government interventions like CGTMSE, GeM, PMEGP, Zero Defect/ Zero Effect, RAMP, Udyam Portal, Mudra Yojana, etc. have supported the MSME sector and promoted Ease of Doing Business. Structural challenges are also being addressed by providing collateral-free loans, supporting marketing initiatives, reducing compliance burden, enabling exports, allowing seamless registration on the NCS portal and interest equalization post COVID.
The Ministry of Food Processing Industries has published an E-Book of Schemes for MSMEs on its website. There has been double-digit growth in Bank credit to MSMEs, owing to the government’s Emergency Credit Line Guarantee Scheme, as the Economic Survey of India 2022 states. However, at the scale at which MSMEs operate in our country, accounting for more than 30% of India’s GDP, a lot still remains to be done.
For example, another challenge encountered during the project, according to the Program Manager, was cultivating an entrepreneurial mindset of rural women and their migration from being a part of an unskilled to a skilled workforce. “A lot of capacity building and training interventions were required to build a team of women, who were earlier used to working individually”, he says. They had to be acquainted with the usage of electrical machinery and to were made to learn the professionalism of a workspace.
Many times, there is also hesitation from family members in showing support towards such small or medium scaled enterprises. Women leaving their seemingly ‘secure’ household spaces is not well celebrated in rural communities. However, as famously stated by a woman formerly in leadership, Shirley Chisholm, “If they don’t give you a seat at the table, bring a folding chair…”.
After all, where there is a will, women find their way. And one such way is found by the women working at the WE Mill. The project has now reached a level where samples are approved even for exporting, thus making it a vital catalyst for economic growth.
“Now I have stable income throughout the year… this has given me a greater sense of security”, says Manisha*, a WE Mill entrepreneur, previously working in a brick factory on daily wages.
Sunita, Manisha and their 12 other colleagues are now social entrepreneurs, who not only have perennial work but are also shareholders of their organization.
While interventions such as the WE Mill Project by human development organizations like GRAAM, keep the spirits of these rural entrepreneurs high, much more needs to be done to make them soar to the heights they deserve. Government efforts towards ease of registration, enabling the collaboration of people from different SHGs, credit support, access to Special Economic Zones (SEZs) benefits, export orientation measures, etc are still required for the MSME sector to flourish at its peak.
MSMEs will be the key driver of India’s developmental journey in the years to come. Upskilling measures and structural support measures will be the need of the hour for them to advance further. Bright spots are already visible in projects like WE Mill, with the potential of catering to international business in a very short span of time.
With a strong MSME sector, India can foster innovation and entrepreneurship and contribute to its growth story of reaching the goal of $5 trillion economy very soon.
The WE Mill project is an award-winning social business.
*Names changed for confidentiality.
Published in a personal capacity as a Policy Professional serving at a leading think tank. The views and opinions expressed in this blog post are solely those of the author and do not necessarily reflect the official policy or position of the mentioned organization.
