Amey Khardenavis, Legal Lead, PadCare Labs Private Limited
ABSTRACT
Micro, Small, and Medium Enterprises (MSMEs) are a critical segment of the Indian economy, contributing significantly to GDP, employment, exports, and industrial production. Despite their importance, MSMEs face numerous challenges, particularly in the areas of delayed payments, legal hurdles, and workforce issues. This paper explores these challenges in depth while integrating recent statistics that underscore the sector’s economic contribution. MSMEs contribute approximately 30% to India’s GDP, with the manufacturing and services sectors accounting for 6.11% and 24.63%, respectively. They are the second-largest employer after agriculture, providing jobs to approximately 110-120 million people, or 40% of India’s workforce. Additionally, MSMEs contribute about 45-50% of India’s total exports, playing a crucial role in sectors such as textiles, gems and jewelry, and auto components. The paper also examines the existing legal frameworks, particularly the MSMED Act, 2006, and the MSME Samadhan Portal, identifying significant loopholes and inefficiencies that limit their effectiveness in addressing delayed payments. Finally, the paper provides strategic recommendations for enhancing the operational effectiveness of MSMEs, emphasizing the need for stronger payment enforcement, simplified regulatory compliance, and targeted workforce development initiatives. These measures are essential for unlocking the full potential of MSMEs and ensuring their continued contribution to India’s economic growth.
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