Report | Creating Resilience

MSMEs Unleashing the Engines of Economic Prosperity

January 8, 2024 15 Minute Read

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This report emphasises the pivotal role played by the Udyam scheme, a government initiative designed to promote and foster the growth of MSMEs. Apart from several incentives by the central government, state governments too have introduced measures to incentivise the sector. As per the findings of this report, Maharashtra accounted for the highest share of MSMEs in the country at 17%, followed by Tamil Nadu (10%) and Uttar Pradesh (9%).

 

The real estate sector plays a vital role in the MSME landscape, with construction firms, contractors, suppliers and consultants coming under its ambit. The construction sector, accounting for about 8% of India’s GDP, is slated to become the third largest globally over the next two years. Several firms in the construction and allied sectors are mainly considered unorganised; however, this also creates an opportunity for them to register as MSMEs.

 

Below are a few key trends observed about the MSME sector in India:

·        Zero collateral loans, reduced interest rates, and concessions on electricity consumption are some benefits that real estate MSMEs can take advantage of.

·        In the real estate sector, while established developers with a proven track record continue to seek financing from avenues such as commercial banks, private equity firms, pension funds, etc., smaller developers often face challenges in attaining project-level funding.

·        For real estate MSMEs, maintaining a proven track record of executing projects in a timely manner, formal documentation processes and efficient cash flow management is expected to infuse confidence amongst lenders.

·        Looking ahead, tech-enabled lending, upgrading MSME infrastructure, digitalising the economy, and developing skills and talent would be critical enablers for the overall development of the sector in India.

 

To delve deeper into our report on India’s MSMEs, please click the download button.