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SMEs drive 43.6% of India’s global trade in 2022-23

December 6, 2023
in Business
SMEs drive 43.6% of India’s global trade in 2022-23
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The contribution of the SME sector to the country’s gross domestic product (GDP) has rebounded to nearly 30%, with the sector’s gross value added recovering to 29.2% in FY22, according to data released by the MSME ministry.

This comes after a decline from 30.5% in FY20 and FY19 to 27.2% in FY21. The share had previously increased from 29.25% in FY17 to 29.69% in FY18.

This recovery is significant as the government aims to boost the MSMEs’ share in the GDP. Former MSME Minister Nitin Gadkari had set ambitious targets in 2020, including increasing the sector’s share in exports to 60% from 48%, creating 50 million additional jobs, and elevating the GDP share to 40% by 2025.

According to the World Economic Outlook (WEO) database of the International Monetary Fund, India’s GDP is expected to reach $5.15 trillion by 2027, up from $3.39 trillion in 2022.

In terms of manufacturing, the MSME manufacturing output’s share in all India manufacturing output for the years 2019-20, 2020-21, and 2021-22 was 36.6%, 36.9%, and 36.2%, respectively.

The Directorate General of Commercial Intelligence and Statistics (DGCIS) data indicates that the share of MSME-specified product exports in all India exports for the years 2020-21, 2021-22, and 2022-23 was 49.4%, 45.0%, and 43.6%, respectively. While the export share declined, the value of MSME exports increased to $190 billion in FY22.

It’s important to note that the MSME sector’s contribution to India’s total exports includes not only MSME goods but also contributions from large enterprises, as highlighted by Prafulla Chandra Mishra, Statistical Advisor at the Directorate General of Foreign Trade (DGFT).

India’s “MSME-related export” was $189,768 million in FY22, a growth of 31.9% compared to $143,823 million in FY21. However, for exports of items reserved for manufacturing by MSMEs or exclusive to MSMEs, the share in India’s total exports decreased from 9.1% ($26.4 million) in FY21 to 7.7% ($32.6 million) in FY22, as reported by Mishra.

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