Subrahmanyam highlighted the diverse nature of MSMEs, making it difficult to address their challenges with a one-size-fits-all approach. He noted that micro enterprises are often small family-run businesses, while medium enterprises have the potential to evolve into India’s next industrial leaders. The biggest challenge, he said, is understanding and catering to the unique needs of each segment.
“MSMEs are the largest employment generators in India. Unlike large corporations where automation dominates, MSMEs create opportunities for millions,” he stated. He stressed that without supporting this sector’s growth, India cannot aspire to become a developed economy.
The NITI Aayog CEO pointed out that while India has had success in manufacturing, particularly in mobile phone production, the country remains highly dependent on imports for essential components.
“95% of what goes into mobile manufacturing—plastics, lenses, chips—is imported. If we want to truly integrate into global value chains, we must develop a robust domestic ecosystem,” he said.
He underscored that intermediate goods, which form the bulk of global trade, are largely produced by MSMEs. Developing this sector is essential for India’s global manufacturing ambitions.
Regulatory and Skill Challenges
Subrahmanyam acknowledged that MSMEs struggle the most with regulatory challenges. Unlike large corporations that can afford legal and compliance teams, smaller businesses often bear the brunt of bureaucratic red tape. However, he highlighted ongoing government efforts to deregulate business operations, including reforms in land, electricity, and water-related issues.
Additionally, technology adoption and workforce skilling remain significant hurdles for MSMEs.
“Large firms can afford to train employees, but MSMEs cannot. A lack of skilled workers impacts them disproportionately,” he noted. He also stressed the importance of improving quality certification and standards to enhance MSMEs’ competitiveness.
Technology as a Growth Driver
Discussing the role of technology in driving efficiency and cost reduction, Subrahmanyam cited global examples, particularly Japan’s strong vendor development programs. He encouraged Indian businesses to adopt similar models to enhance supplier capabilities.
With India projected to become the third-largest economy by 2027-28, he stressed that achieving this milestone requires raising manufacturing standards nationwide.
“The future giants of Indian business will emerge from today’s medium enterprises. These companies must be technologically advanced and globally competitive,” he stated.
In closing, he emphasised that education, skills, and MSME development are the two most crucial pillars for India’s ambition of becoming a $50 trillion economy.
“Without investing in people and manufacturing, India’s growth story will remain incomplete,” he concluded.
