Faster economic growth requires increased share of the manufacturing sector in GDP, particularly of MSMEs. Comment on the present policies of the Government in this regard.

Why manufacturing and MSMEs matter

Manufacturing contributes only about 17% of Gross Value Added, well short of the 25% target set under the National Manufacturing Policy (2011) and Make in India. MSMEs, however, account for roughly 30% of GDP, about 45% of exports and employ over 110 million people, making them the natural vehicle for labour-intensive, broad-based growth.

Present government policies

• Production Linked Incentive (PLI) schemes across 14 sectors (outlay ~₹1.97 lakh crore) to build scale and integrate India into global value chains.
• Revised MSME definition (2020) merging investment and turnover criteria, easing the fear of losing benefits on growing — tackling “dwarfism”.
• Atmanirbhar Bharat support: ECLGS collateral-free credit, CGTMSE guarantees, TReDS for receivables, and 25% public procurement reserved for MSMEs.
• Udyam registration for formalisation and Make in India for FDI and ease of doing business.

Comment

The direction — scale via PLI, credit and formalisation — is sound, and gross manufacturing output and exports have risen. Yet the GDP share is stagnant, MSMEs still face a large credit gap, delayed payments and informality. Faster growth needs execution: cheaper credit, logistics reform and skilling, not fresh schemes alone.