SME Digital World

Author: SDW Editorial Desk

MSMEs: 30% GDP & 28 Crore Jobs in the Indian Economy

MSMEs: 30% GDP & 28 Crore Jobs in the Indian Economy

MSMEs are the true engines of growth, contributing over 30 per cent to GDP and 45 per cent to exports, according to an MSME Ministry official on Tuesday. They are also providing employment to more than 28 crore people, particularly with their presence across Tier-2 and Tier-3 cities. Addressing the CII MSME Growth Summit 2025, Additional Secretary and Development Commissioner, MSME Ministry, Dr Rajneesh, said that their resilience enabled India’s swift post-pandemic recovery, and they will be central to achieving the vision of Viksit Bharat.
In the last three years, the MSME Ministry has facilitated credit guarantees worth Rs 6.4 lakh crore, he said. He also noted that 100 technology centres are being established nationwide to strengthen MSME competitiveness. Stressing the need to shift from a price-centric approach to one anchored in quality, competitiveness, and technology adoption, Dr Rajneesh said that MSMEs must integrate into global value chains to drive India’s vision of becoming a Viksit Bharat by 2047.
CII National MSME Council Chairman and Rajratan Global Wire CMD Sunil Chordia said that focusing on formalisation and ease of doing business, capital access and investment, technology, innovation and productivity, skill development and workforce can enhance the competitiveness of MSMEs. CII National MSME Council Co-Chairman and Pon Pure Chemicals India Pvt Ltd CMD M. Ponnuswami stressed the importance of raising awareness among MSMEs in Tier-2 and Tier-3 cities about the opportunities offered by Industry 4.0, low-cost automation, and credit schemes.
Meanwhile, Somany Ceramics Chairman and Managing Director Shreekant Somany underscored that India’s growth story is inseparable from the success of MSMEs, which are evolving as global players with fast-rising exports. CII National Committee on Smart Manufacturing Chairman and Rockwell Automation Managing Director Dilip Sawhney noted that Industry 4.0 solutions are pivotal for MSMEs to overcome challenges of traceability and compliance that restrict their integration with global clients. CII’s Working Group on Technology, CII ASCON Council Chairman, and Siemens’ Director, Industry and Policy Vikram Gandotra emphasised that Indian industry can match global leaders like Germany and South Korea by embracing technology, innovation, and design excellence.
Job Creation Statistics
The sheer scale of employment generated by MSMEs is a testament to their vital role in the Indian economy. Providing livelihoods to over 28 crore individuals, these enterprises serve as a crucial source of income and economic empowerment, particularly in regions beyond major metropolitan areas. The decentralised nature of MSMEs allows them to reach into the heart of Tier-2 and Tier-3 cities, creating job opportunities where they are often most needed and contributing to a more balanced distribution of wealth and development across the country.
Furthermore, the employment landscape within MSMEs is diverse, encompassing a wide range of skills and expertise. From traditional crafts and manufacturing to emerging technology and service sectors, these enterprises offer opportunities for both skilled and unskilled workers, playing a significant role in absorbing a large portion of the Indian workforce. This capacity to provide varied employment options is particularly important in a country with a young and rapidly growing population, ensuring that individuals have access to meaningful work and can contribute to the nation’s economic progress.
The impact of MSME employment extends beyond individual livelihoods, contributing significantly to overall social and economic stability. By providing stable income sources and fostering entrepreneurship at the grassroots level, these enterprises help to reduce poverty, improve living standards, and create a more inclusive and equitable society. The multiplier effect of MSME employment is considerable, as increased income leads to higher consumption, investment, and further economic activity, creating a virtuous cycle of growth and development.
Moreover, the job creation potential of MSMEs is not limited to direct employment within the enterprises themselves. The growth and expansion of MSMEs also stimulate demand for supporting industries and services, leading to indirect job creation in sectors such as transportation, logistics, finance, and marketing. This interconnectedness highlights the broader economic impact of MSMEs and their role in fostering a vibrant and dynamic ecosystem that supports employment generation across various sectors.
Key Drivers Of Msme Growth
The sustained growth of MSMEs is propelled by several interconnected factors. Firstly, the ongoing formalisation of the sector is crucial. Streamlining regulations, simplifying compliance procedures, and providing incentives for registration encourages more enterprises to enter the formal economy. This, in turn, facilitates access to credit, government schemes, and other benefits, fostering growth and competitiveness.
Secondly, access to capital and investment is paramount. MSMEs often face challenges in securing adequate funding for expansion, modernisation, and working capital. Initiatives aimed at improving credit access, promoting venture capital investment, and establishing dedicated MSME funding mechanisms are essential for unlocking their growth potential.
Thirdly, technology adoption and innovation are key drivers. Embracing Industry 4.0 technologies, such as automation, artificial intelligence, and data analytics, can significantly enhance productivity, efficiency, and competitiveness. Promoting technology transfer, providing training and support for technology adoption, and fostering a culture of innovation are vital for enabling MSMEs to leverage these advancements.
Fourthly, skill development and workforce enhancement are critical. Equipping the workforce with the skills and knowledge required to operate in a rapidly evolving technological landscape is essential for ensuring the success of MSMEs. Investing in vocational training, promoting apprenticeships, and fostering collaboration between industry and educational institutions can help to bridge the skills gap and create a skilled workforce that meets the needs of MSMEs.
A supportive ecosystem is essential. This includes a conducive regulatory environment, access to infrastructure, and effective support services. Streamlining regulations, reducing bureaucratic hurdles, improving infrastructure connectivity, and providing access to market information and business advisory services can create a more enabling environment for MSMEs to thrive.
Impact On Indian Economy
The collective impact of MSMEs on the Indian economy is far-reaching and multifaceted. Beyond their direct contributions to GDP, exports, and employment, these enterprises play a crucial role in fostering innovation, promoting regional development, and enhancing social inclusion. Their widespread presence across diverse sectors and regions makes them a vital engine for driving sustainable and inclusive economic growth.
MSMEs are often at the forefront of innovation, developing new products, services, and business models that cater to local needs and contribute to overall economic dynamism. Their agility and adaptability allow them to respond quickly to changing market conditions and emerging opportunities, fostering a culture of entrepreneurship and experimentation that drives economic progress.
Moreover, MSMEs play a crucial role in promoting regional development by creating jobs and generating income in areas beyond major metropolitan centres. Their decentralised nature allows them to contribute to a more balanced distribution of wealth and development across the country, reducing regional disparities and fostering greater social cohesion.
MSMEs also contribute significantly to social inclusion by providing opportunities for marginalised communities and promoting entrepreneurship among women and other underrepresented groups. Their ability to create jobs and generate income in local communities empowers individuals and families, improving living standards and fostering greater social equity.
The integration of MSMEs into global value chains is essential for enhancing their competitiveness and driving India’s vision of becoming a Viksit Bharat by 2047. By participating in global trade and investment flows, MSMEs can access new markets, technologies, and expertise, enhancing their productivity and contributing to overall economic growth.
The impact of MSMEs on the Indian economy is undeniable. Their contributions to GDP, exports, employment, innovation, regional development, and social inclusion make them a vital engine for driving sustainable and inclusive economic growth. By fostering a supportive ecosystem and empowering MSMEs to thrive, India can unlock their full potential and achieve its vision of becoming a prosperous and equitable nation.

August 28, 2025
Ignoring ai a costly mistake for indian msmes

Ignoring ai is a costly mistake for indian msmes

The potential benefits of adopting artificial intelligence are substantial, particularly for Indian MSMEs. AI offers a pathway to increased efficiency, innovation, and ultimately, a stronger competitive advantage in the global market. The numbers paint a clear picture: AI can boost manufacturing productivity by as much as 30%, unlocking significant value for businesses willing to embrace it.
One of the most compelling advantages of AI is its ability to drive cost reduction. By automating repetitive tasks, optimising resource allocation, and improving predictive maintenance, AI helps businesses minimise waste and streamline operations. This translates into tangible savings that can be reinvested in other areas of the business, fostering further growth and innovation.
Beyond cost reduction, AI empowers Indian MSMEs to enhance their products and services. AI-powered analytics can provide valuable insights into customer behaviour, enabling businesses to personalise offerings and improve customer satisfaction. Furthermore, AI can facilitate the development of new and innovative products, giving businesses a crucial edge in a rapidly evolving marketplace.
Ultimately, embracing AI is not just about short-term gains; it’s about securing future growth. By leveraging AI, Indian MSMEs can build more resilient, adaptable, and competitive businesses that are well-positioned to thrive in the digital age. The ability to analyse data, automate processes, and make data-driven decisions is no longer a luxury, but a necessity for sustained success.
Challenges and solutions
Despite the clear advantages, Indian MSMEs face significant hurdles in adopting artificial intelligence. The hesitation often stems from a combination of factors, including a lack of awareness, limited technical capabilities, and a perception of AI as an inaccessible or even threatening innovation. This reluctance is proving costly, as global competitors leverage AI to reimagine supply chains, optimise production, and improve customer experiences.
Key Challenges:
1. Lack of Awareness and Understanding: Many Indian MSMEs are simply unaware of the potential benefits of AI or lack a clear understanding of how it can be applied to their specific business needs. This knowledge gap prevents them from even considering AI as a viable solution.
2. Limited Technical Expertise: Implementing and managing AI solutions requires skilled personnel, which are often in short supply and expensive to hire. Many MSMEs struggle to find or afford the necessary expertise to effectively integrate AI into their operations.
3. Infrastructural Limitations: Adequate computing power, data storage, and reliable internet connectivity are essential for AI implementation. Many Indian MSMEs, particularly those in rural areas, face infrastructural limitations that hinder their ability to adopt AI.
4. Data Availability and Quality: AI algorithms require large amounts of high-quality data to train effectively. Many MSMEs lack the data infrastructure or processes to collect, store, and manage data in a way that is suitable for AI applications.
5. Cost Concerns: The initial investment in AI hardware, software, and expertise can be significant, creating a barrier for many cost-conscious MSMEs. They may perceive AI as an expensive luxury rather than a strategic investment.
Potential Solutions:
1. Awareness Programs and Training: Government and industry bodies should launch awareness programs to educate Indian MSMEs about the benefits of AI and provide training on basic AI concepts and applications. These programs can help dispel misconceptions and build confidence in AI technologies.
2. Skills Development Initiatives: Investing in skills development initiatives to train a new generation of AI professionals is crucial. This can include partnerships between universities, vocational training centres, and industry to create a pipeline of skilled workers who can support AI adoption in MSMEs. This can foster future growth.
3. Accessible AI Platforms and Tools: Developing affordable and user-friendly AI platforms and tools specifically designed for MSMEs can lower the barrier to entry. Cloud-based solutions and pre-trained AI models can make it easier for MSMEs to experiment with and implement AI without significant upfront investment.
4. Data Sharing and Collaboration: Encouraging data sharing and collaboration among MSMEs can help overcome data scarcity challenges. Industry consortia and government-backed data platforms can facilitate the sharing of anonymised data, enabling MSMEs to collectively benefit from AI insights. This will enhance their competitive advantage.
5. Financial Incentives and Support: Governments can provide financial incentives, such as tax breaks, subsidies, and grants, to encourage Indian MSMEs to invest in AI technologies. These incentives can help offset the initial cost and make AI more accessible to smaller businesses, helping with cost reduction.

June 30, 2025
Over 50 lakh workers benefit from labour welfare schemes

Over 50 lakh workers benefit from labour welfare schemes

Across India, labour welfare schemes have positively impacted the lives of over 50 lakh workers and their families. These government initiatives, spearheaded by the Ministry of Labour and Employment, primarily target individuals in the Beedi, Cine, and Mining sectors. The Directorate General of Labour Welfare (DGLW) manages these schemes through the Labour Welfare Organisation (LWO).

The LWO operates through a network of 18 Welfare Commissioners, strategically positioned throughout the country. Their presence ensures effective implementation and accessibility of the benefits, especially in remote and underserved regions. These workers receive crucial support through diverse social security benefits.

The schemes aim to uplift those working in the unorganised sector, providing them with much-needed assistance. The significant number of beneficiaries underscores the effectiveness of these programmes in reaching and supporting vulnerable populations across India. These schemes are vital for improving the living standards and overall well-being of a substantial portion of the workforce.
Key Labour Welfare Initiatives
Several key labour welfare initiatives form the backbone of the support system for workers. These schemes encompass a broad spectrum of assistance, addressing various needs from healthcare to housing. One significant initiative focuses on providing financial assistance for medical treatment, ensuring that workers and their families have access to quality healthcare without facing crippling debt. This support extends to covering the costs of surgeries, hospital stays, and essential medications.

Another crucial aspect of the government initiatives involves providing educational support for the children of workers. Scholarships and grants are available to help them pursue their academic aspirations, ensuring that financial constraints do not hinder their access to education. These scholarships cover school fees, books, and other essential educational expenses. By investing in the education of these children, the schemes contribute to breaking the cycle of poverty and empowering future generations.

Housing is another critical area addressed by these labour welfare schemes. Recognising the importance of safe and affordable housing, the government provides financial assistance for construction, repair, or purchase of homes. This initiative aims to improve the living conditions of workers and their families, providing them with a secure and stable environment. This housing support often includes subsidies and low-interest loans, making homeownership more accessible for workers in the unorganised sector. The impact of these schemes extends far beyond mere financial assistance; they provide a sense of security and dignity to over 50 lakh workers across India.
Impact on Workers’ Lives
The government initiatives have a tangible impact on the lives of workers and their families. Access to better healthcare through the schemes means reduced financial burden during times of illness, allowing workers to focus on recovery rather than debt. Families report a significant decrease in stress related to medical emergencies, knowing that support is available.

Educational support for children is transforming futures. Many beneficiaries recount stories of children who, without the scholarship, would have been forced to drop out of school to support their families. Now, these children are excelling in their studies, pursuing higher education, and aspiring to careers that were previously beyond their reach. This creates a ripple effect, improving not only their individual prospects but also contributing to the overall economic and social development of their communities across India.

Improved housing conditions contribute significantly to the workers’ overall well-being. Living in safer, more stable homes provides a sense of security and dignity, leading to improved physical and mental health. Reduced exposure to environmental hazards and better sanitation facilities contribute to fewer illnesses and a higher quality of life. This positive impact extends to the entire family, creating a more conducive environment for children to thrive. The Labour welfare schemes are truly making a difference in the lives of over 50 lakh beneficiaries.

June 18, 2025
Wpi inflation eases hitting a 14-month low of 0.39%.

WPI Inflation eases hitting a 14-month low of 0.39%.

India’s wholesale price index (WPI) inflation eased significantly in May 2025, hitting a 14-month low of 0.39%. This represents a considerable drop from 0.85% in April and 2.05% in March, according to data released by the Ministry of Commerce and Industry. The decline signals a continued moderation in price pressures within the Indian economy.

Several factors contributed to this cooling of inflation. Primarily, falling prices of food items, fuel (particularly petrol and diesel), and manufactured products were major drivers. The consistent decline across these sectors suggests a broad-based disinflationary trend is taking hold. The softening of food inflation to 0.99%, marking its seventh consecutive monthly decline, also played a crucial role. Improved agricultural output, coupled with a favourable base effect, aided this decline.

The fact that WPI inflation dipped into negative territory on a month-over-month basis, registering at -0.06%, further underscores the easing price pressures. This is welcome news alongside the concurrent decline in Consumer Price Index (CPI)-based retail inflation, which reached 2.82% in May, the lowest level seen since February 2019. These figures may provide an economic boost, and offer the RBI greater flexibility in its monetary policy decisions.

Sectoral Price Movements

A closer look at individual sectors reveals a nuanced picture of price movements in May. The primary articles category witnessed a substantial moderation in inflation, largely driven by easing food prices, as previously noted. Within this category, vegetables experienced significant price drops due to improved supply chains and favourable weather conditions. This downward pressure helped to offset some increases observed in other primary articles.

Fuel and power also contributed significantly to the overall WPI easing. Petrol and diesel prices saw a notable decline, reflecting lower international crude oil prices and government measures aimed at reducing fuel taxes. This decrease had a cascading effect on transportation costs, further aiding disinflation. However, coal prices remained relatively stable, limiting the overall impact of the fuel and power category.

In the manufactured products segment, several sub-sectors experienced price corrections. Basic metals, chemicals, and textiles all saw a moderation in wholesale price index inflation. This could be attributed to factors such as reduced input costs, subdued global demand, and increased domestic production capacity. Conversely, certain manufactured goods, such as machinery and equipment, witnessed slight price increases, potentially reflecting higher raw material costs or supply chain bottlenecks.

Policy Implications Discussed

The significant easing of WPI inflation to a 14-month low of 0.39% in May has prompted considerable discussion regarding its policy implications. The Reserve Bank of India (RBI) has already responded by revising its inflation projection for FY26 downwards, from 4% to 3.7%. This adjustment reflects the central bank’s confidence that the disinflationary trend will persist, creating space for potential monetary easing measures.

Specifically, the data increases speculation about a possible repo rate cut in the coming months. With both WPI and CPI inflation trending downwards, the RBI may feel more comfortable reducing borrowing costs to stimulate economic activity. However, the central bank is likely to adopt a cautious approach, closely monitoring global economic conditions and potential risks to the inflation outlook, such as fluctuations in crude oil prices or unexpected supply chain disruptions. The 0.39% figure will be scrutinized alongside other economic indicators.

Furthermore, the easing of wholesale price index inflation could influence government policies aimed at supporting specific sectors. For instance, the government may consider targeted interventions to address challenges faced by industries experiencing price declines, such as providing subsidies or incentives to boost production and competitiveness. This could be a way to turn the economic boost into long term growth. Conversely, sectors facing upward price pressures may warrant closer monitoring to prevent inflationary spillovers into the broader economy. The WPI data provides valuable insights for policymakers to fine-tune their strategies and ensure sustainable economic growth.

Expert Analysis Provided

Economists and market analysts are closely examining the latest WPI data to understand the underlying dynamics and potential future trajectory of inflation. Several experts believe that the 0.39% figure for May, a 14-month low, is a positive sign, indicating that the measures taken by the government and the RBI are starting to yield results. They point to the broad-based nature of the disinflation, encompassing food, fuel, and manufactured products, as evidence of a sustained downward trend.

However, some analysts remain cautious, highlighting potential risks that could disrupt the current disinflationary path. They emphasize the importance of monitoring global commodity prices, particularly crude oil, and geopolitical developments, which could lead to supply chain disruptions and renewed inflationary pressures. Additionally, they note that the base effect, which has contributed to the recent decline in inflation, may fade in the coming months, potentially leading to a slower pace of disinflation.

Several economists also highlight the impact of the easing inflation on corporate profitability. With input costs declining, companies may experience improved margins, potentially leading to increased investment and job creation. However, they caution that this benefit may be unevenly distributed across sectors, with some industries benefiting more than others. Experts generally agree that the current economic climate presents an opportunity for the government to implement structural reforms aimed at enhancing productivity and competitiveness, which would support sustainable economic growth and further tame inflation. This WPI data and the resulting economic boost, if managed well, could lead to long-term stability.

June 17, 2025
Cloud solutions can reduce costs for indian smes
Cloud computing offers a wealth of advantages for Indian SMEs, transforming how they operate and compete in today’s dynamic market. One of the most compelling reasons to adopt cloud solutions is the enhanced agility and flexibility they provide. Businesses can quickly adapt to changing market conditions, scale their operations up or down as needed, and access resources from anywhere with an internet connection. This level of responsiveness is crucial for SMEs looking to seize new opportunities and stay ahead of the competition.

Another significant benefit lies in improved collaboration and communication. Cloud-based tools enable teams to work together seamlessly, regardless of their physical location. Documents can be shared and edited in real-time, projects can be managed more effectively, and communication channels are streamlined. This fosters a more productive and efficient work environment, leading to better outcomes for Indian SMEs.

Furthermore, cloud solutions enhance data security and disaster recovery capabilities. Reputable cloud providers invest heavily in security infrastructure and protocols to protect data from cyber threats and other risks. In the event of a disaster, cloud-based data backups ensure business continuity and minimise downtime. This provides peace of mind for Indian SMEs, knowing that their valuable data is safe and accessible.

The adoption of scalable solutions is another important advantage for SMEs. As their business grows, they can easily scale their cloud resources to meet increasing demands without significant upfront investment. This ensures that their IT infrastructure can support their growth trajectory, without the limitations of traditional on-premise systems.
Cost Reduction Strategies
Indian SMEs can implement several effective strategies to achieve substantial cost reduction by leveraging cloud solutions. These strategies address various aspects of IT spending and operational efficiency, resulting in significant savings over time.

Optimising Infrastructure Costs

One of the primary ways cloud computing drives cost reduction is by optimising infrastructure costs. Instead of investing heavily in on-premise servers, hardware, and software licenses, SMEs can subscribe to cloud services on a pay-as-you-go basis. This eliminates the need for large upfront capital expenditures and reduces ongoing maintenance expenses. Here’s how:

Reduced Hardware Expenses: Cloud solutions remove the need to purchase and maintain physical servers, significantly lowering hardware costs.

Lower Energy Consumption: By outsourcing infrastructure to cloud providers, SMEs reduce their energy consumption and associated utility bills.

Decreased IT Staffing Costs: Cloud services often require less in-house IT support, leading to lower staffing costs for maintenance and management.

Streamlining Operations and Automation

Cloud solutions facilitate streamlining operations and automation, leading to improved efficiency and cost savings. By automating repetitive tasks and processes, SMEs can free up valuable time and resources for more strategic initiatives. This includes:

Automated Backups and Disaster Recovery: Cloud-based backup and disaster recovery solutions automate data protection, reducing the risk of data loss and minimising downtime in the event of a disaster.

Automated Software Updates: Cloud providers handle software updates and patching automatically, eliminating the need for manual intervention and reducing IT workload.

Workflow Automation: Cloud-based workflow automation tools streamline business processes, improving efficiency and reducing manual effort.

Leveraging Scalable Solutions

Scalable solutions enable Indian SMEs to optimise their resource allocation and avoid overspending on IT infrastructure. Businesses can easily scale their cloud resources up or down based on their actual needs, ensuring they only pay for what they use. This flexibility is particularly beneficial for SMEs with fluctuating workloads or seasonal demands.

By adopting these cost reduction strategies, Indian SMEs can unlock the full potential of cloud solutions and achieve significant savings while improving their operational efficiency and competitiveness.
June 12, 2025
Up government boosts msme exports with upnva campaign

Up government boosts msme exports with upnva campaign

The Uttar Pradesh government has officially launched the UPNVA campaign, a strategic initiative designed to significantly boost exports from the state’s Micro, Small, and Medium Enterprises (MSME) sector. The campaign aims to provide a comprehensive support system for small businesses, enabling them to access global markets more effectively. UPNVA represents a multi-pronged approach, incorporating training programmes, financial assistance, and logistical support to empower MSMEs to compete on an international scale. The up government envisions this campaign as a catalyst for economic growth, fostering job creation and enhancing the overall competitiveness of Uttar Pradesh.

The UPNVA campaign will focus on identifying and nurturing export-ready MSMEs across various sectors within Uttar Pradesh. It includes workshops on export procedures, quality control, and international marketing strategies. Furthermore, the campaign will facilitate participation in international trade fairs and exhibitions, providing a platform for MSMEs to showcase their products and establish valuable business connections. The upnva campaign seeks to streamline the export process, reducing bureaucratic hurdles and making it easier for small businesses to navigate the complexities of international trade. The ultimate goal is to drive substantial growth in msme exports from Uttar Pradesh.
Msme Export Growth Strategy
The UP government’s MSME export growth strategy hinges on several key pillars. Central to this is identifying high-potential sectors within Uttar Pradesh, such as handicrafts, textiles, leather goods, and agricultural products. The UPNVA campaign will then provide targeted support to businesses in these sectors, helping them to adapt their products and processes to meet international standards. This involves rigorous quality control measures, adherence to global certifications, and the adoption of sustainable production practices.

Another crucial aspect of the strategy involves strengthening the export infrastructure within Uttar Pradesh. This includes improving transportation networks, streamlining customs procedures, and establishing dedicated export promotion zones. The UP government is also working to enhance access to export finance, providing MSMEs with the capital they need to scale up their operations and compete effectively in international markets. This support extends to helping small businesses navigate complex trade regulations and access market intelligence, ensuring they are well-informed and prepared to succeed.

Furthermore, the strategy emphasises the importance of collaboration between government agencies, industry associations, and academic institutions. The UPNVA campaign will facilitate partnerships between MSMEs and research institutions, promoting innovation and the development of new exportable products. It will also work closely with industry associations to identify common challenges and develop collective solutions. This collaborative approach is essential to creating a supportive ecosystem for MSME exports and driving sustainable economic growth across Uttar Pradesh.
Government Support Initiatives
The Uttar Pradesh government is implementing a range of support initiatives to bolster the UPNVA campaign and ensure its success. These initiatives include financial assistance programmes, skill development training, and infrastructure improvements specifically designed to benefit MSMEs. Subsidised loans and credit guarantee schemes are available to help small businesses access the capital they need to expand their production capacity and fulfil export orders. The up government understands the financial constraints often faced by msmes and is committed to providing targeted financial support.

Furthermore, the upnva campaign provides extensive skill development training to enhance the capabilities of workers in the MSME sector. These training programmes cover a wide range of topics, including modern manufacturing techniques, quality control procedures, and international marketing strategies. The goal is to equip MSMEs with the skills they need to produce high-quality goods that meet international standards and to effectively market their products to global customers. The up government believes that investing in human capital is essential for driving sustainable export growth.

In addition to financial assistance and skill development, the up government is also focusing on improving the infrastructure that supports MSME exports. This includes upgrading transportation networks, streamlining customs procedures, and establishing dedicated export promotion zones. The aim is to reduce the time and cost associated with exporting goods from Uttar Pradesh, making it easier for small businesses to compete in international markets. These initiatives collectively contribute to a more conducive environment for MSME growth and facilitate increased exports from the region.
Expected Economic Impact
The UPNVA campaign is projected to have a significant and multifaceted economic impact on Uttar Pradesh. By fostering growth in MSME exports, the campaign is expected to generate substantial revenue for the state, contributing to overall economic prosperity. Increased exports will lead to higher production levels, creating new employment opportunities across various sectors. This will not only reduce unemployment rates but also improve the living standards of many families in Uttar Pradesh. The up government anticipates a significant boost to the state’s GDP as a direct result of the campaign’s success.

Furthermore, the UPNVA campaign is expected to enhance the competitiveness of Uttar Pradesh’s MSME sector on a global scale. By providing small businesses with the necessary training, financial assistance, and logistical support, the campaign will enable them to produce higher-quality goods and services that meet international standards. This will not only increase exports but also attract foreign investment to the state, further stimulating economic growth. The long-term impact of the UPNVA campaign is expected to be a more diversified and resilient economy in Uttar Pradesh, less reliant on domestic markets and more capable of competing in the global arena.

The success of the UPNVA campaign will also have a positive ripple effect on other sectors of the Uttar Pradesh economy. Increased demand for raw materials and components from MSMEs will benefit local suppliers, creating further employment opportunities and stimulating economic activity in rural areas. The campaign is also expected to promote innovation and entrepreneurship, as small businesses are encouraged to develop new products and services for export markets. The upnva campaign represents a strategic investment in the future of Uttar Pradesh, with the potential to transform the state into a major export hub.

June 11, 2025
Govt notifies sez reforms

Govt notifies sez reforms

The government has introduced ground-breaking reforms to the Special Economic Zones (SEZ) regulations, specifically targeting the unique demands of the semiconductor and electronics component manufacturing sectors in India. Recognising that manufacturing in these sectors is capital-intensive, reliant on imports, and subject to lengthy periods before profitability, the rule changes aim to stimulate pioneering investments and boost manufacturing in these high-technology sectors.

Following amendments to Rule 5 of the SEZ Rules, 2006, an SEZ established solely for the manufacturing of semiconductors or electronic components will now require a minimum contiguous land area of just 10 hectares, a significant reduction from the previous requirement of 50 hectares. Further, changes to Rule 7 of the SEZ Rules, 2006, empower the Board of Approval for SEZs to waive the condition that SEZ land must be free of encumbrances in cases where it is mortgaged or leased to the Central or State Government or their authorised agencies.

The amended Rule 53 now allows the value of goods received and supplied free of charge to be included in Net Foreign Exchange (NFE) calculations and assessed using relevant customs valuation rules. Moreover, amendments to Rule 18 of the SEZ Rules now permit SEZ units in the semiconductor and electronics component manufacturing sectors to supply domestically into the Domestic Tariff Area after paying the applicable duties. These key amendments aim to make SEZs more accessible and attractive for investment in these critical sectors.
Impact On Businesses
These SEZ reforms are poised to have a substantial impact on businesses operating within the semiconductor and electronics manufacturing sectors in India. The reduction in minimum land requirements will particularly benefit small and medium-sized enterprises (SMEs), allowing them to establish operations within SEZs without the burden of acquiring vast tracts of land. This increased accessibility could foster greater participation from domestic players, boosting competition and innovation within the industry.

The relaxation of encumbrance norms provides much-needed flexibility for companies seeking to set up manufacturing units. Previously, the requirement for encumbrance-free land presented a significant hurdle, especially for businesses with existing land holdings that may have been mortgaged or leased. By allowing the Board of Approval to waive this condition in certain cases, the reforms will unlock opportunities for companies to leverage their existing assets and expedite the establishment of their SEZ operations.

Furthermore, the inclusion of free-of-cost goods in NFE calculations offers a more realistic assessment of the economic contribution of SEZ units. This change acknowledges the prevalence of such arrangements in the semiconductor and electronics manufacturing industries, where components are often provided by parent companies or international partners. By accounting for these goods, the reforms will provide a more accurate picture of the net foreign exchange earned by SEZ units, potentially leading to more favourable policy decisions and incentives.

The ability for SEZ units to supply domestically into the Domestic Tariff Area after paying applicable duties presents a significant opportunity for businesses to tap into the growing Indian market. This will enable them to diversify their revenue streams, reduce their reliance on exports, and cater to the increasing demand for electronics and semiconductor products within the country. This provision could also incentivise foreign companies to establish manufacturing facilities in India, with the aim of serving both domestic and international markets.
Simplified Procedures
The recent reforms to the SEZ regulations also encompass simplified procedures, designed to reduce bureaucratic hurdles and streamline operations for businesses. The Department of Commerce has implemented measures to expedite the approval process for new SEZ units and facilitate smoother customs clearances for goods moving in and out of these zones. These streamlined procedures are expected to significantly reduce the time and cost associated with setting up and operating within SEZs, making them more attractive to investors.

One key aspect of the simplified procedures is the introduction of a single-window clearance system for various approvals and permits required by SEZ units. This system will consolidate multiple application processes into a single online platform, reducing the need for businesses to interact with numerous government agencies. This will not only save time and resources but also enhance transparency and accountability in the approval process.

Furthermore, the government is committed to reducing the compliance burden on SEZ units by simplifying reporting requirements and adopting risk-based inspections. This means that businesses with a proven track record of compliance will be subject to fewer inspections and less stringent reporting obligations. This will allow them to focus on their core business activities, rather than spending excessive time on administrative tasks. These simplified procedures are expected to contribute significantly to the ease of doing business within SEZs, fostering a more conducive environment for investment and growth in the semiconductor and electronics manufacturing sectors in India.
Future Outlook
Looking ahead, these SEZ reforms are expected to catalyse a new era of growth and innovation within India’s semiconductor and electronics manufacturing sectors. The government envisions India emerging as a global hub for high-tech manufacturing, attracting significant foreign direct investment (FDI) and creating numerous high-skilled job opportunities. The recent policy changes are a crucial step towards realising this ambitious vision.

Industry analysts predict that the reduced land requirements and relaxed encumbrance norms will lead to a surge in the number of SEZ applications, particularly from SMEs and domestic manufacturers. This increased participation could foster a more competitive and dynamic ecosystem, driving innovation and technological advancements within the semiconductor and electronics industries. The reforms are also expected to encourage existing SEZ units to expand their operations and invest in new technologies.

Furthermore, the government plans to continue refining the SEZ policy framework based on industry feedback and evolving global trends. This includes exploring further simplifications to procedures, providing targeted incentives for research and development, and fostering collaborations between SEZ units and academic institutions. By remaining agile and responsive to the needs of the industry, India aims to solidify its position as a leading destination for semiconductor and electronics manufacturing, attracting both domestic and international investment in the years to come. The success of these SEZ reforms is crucial for India’s economic growth and its ambition to become a self-reliant manufacturing powerhouse.

June 10, 2025
India’s SMEs forecast for strong April-June growth

India’s SMEs forecast for strong April-June growth

Several factors underpin the optimistic forecast for India’s small and medium enterprises (SMEs) during the April-June quarter. A significant driver is the sustained momentum in domestic demand. Consumer spending remains robust, fuelled by increased disposable incomes and a positive consumer sentiment. This creates a favourable environment for SMEs, which often cater to the local market. Government initiatives promoting entrepreneurship and providing financial assistance also play a crucial role. Schemes like the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) and the Prime Minister’s Employment Generation Programme (PMEGP) facilitate access to credit, enabling SMEs to expand their operations and invest in new technologies.
Furthermore, the ongoing digitisation drive across India empowers SMEs to reach wider markets and improve their operational efficiency. E-commerce platforms provide SMEs with a cost-effective channel to sell their products and services nationwide. Adoption of digital technologies also enhances productivity and reduces administrative burdens. Improved infrastructure, including better road connectivity and logistics, further supports the growth of SMEs by facilitating the smooth movement of goods and services. These infrastructural improvements reduce transportation costs and shorten delivery times, making SMEs more competitive.
A recent report indicates that the easing of global supply chain disruptions is contributing to the positive outlook. This allows SMEs to access raw materials and components more easily, reducing production bottlenecks and improving their ability to meet the increasing demand. The combination of strong domestic demand, supportive government policies, increasing digitisation, improved infrastructure, and easing supply chain constraints creates a conducive environment for growth for India’s SMEs in the April-June quarter.
Sectoral Performance Overview
A detailed report on sectoral performance indicates varied growth trajectories across different segments within India’s SME landscape. The manufacturing sector is expected to witness significant expansion, driven by increased orders from both domestic and international markets. Sectors like textiles, automotive components, and pharmaceuticals are anticipated to perform particularly well, benefiting from government support and a revival in global demand. The services sector is also projected to experience robust growth, fuelled by the increasing demand for IT services, e-commerce, and logistics.
Within the services sector, tourism and hospitality are rebounding strongly, contributing to the overall positive forecast for small and medium enterprises. The agriculture and food processing sectors are likely to see steady growth, supported by government initiatives promoting value addition and export of agricultural products. However, some sectors, such as those heavily reliant on imported raw materials or facing intense competition from larger players, may experience slower growth during the April-June quarter. The overall outlook remains positive, with most sectors expected to contribute to the anticipated expansion of SMEs.
Analysis suggests that SMEs in the technology and e-commerce sectors are poised for particularly strong growth. The increasing adoption of digital technologies across various industries is creating new opportunities for these SMEs. Furthermore, government initiatives promoting digital payments and online transactions are fuelling the expansion of the e-commerce sector, benefiting SMEs that operate in this space. This positive trend is expected to continue throughout the April-June quarter, solidifying the role of technology-driven SMEs in the Indian economy and contributing significantly to the overall growth forecast.
Challenges And Outlook
Despite the promising forecast for India’s SMEs in the April-June quarter, several challenges persist. Access to adequate and timely financing remains a significant hurdle for many small and medium enterprises. While government schemes aim to address this, bureaucratic processes and stringent collateral requirements often hinder SMEs from availing these benefits. The complexity of compliance with various regulations also poses a challenge, particularly for smaller businesses with limited resources to navigate the legal and administrative landscape.
Another concern is the rising cost of raw materials and energy, which can squeeze profit margins for SMEs. Fluctuations in global commodity prices and supply chain disruptions can further exacerbate this issue. Furthermore, intense competition from larger, more established players, as well as from cheaper imports, continues to put pressure on SMEs. Maintaining competitiveness requires continuous innovation, investment in technology, and a focus on improving efficiency. The availability of skilled labour is also a growing concern, particularly in sectors requiring specialised expertise. Addressing this skills gap through vocational training and education programmes is crucial for sustaining the growth of SMEs.
Looking ahead, the outlook for India’s SMEs remains cautiously optimistic. The sustained focus on infrastructure development, digitisation, and ease of doing business is expected to create a more favourable environment for growth. However, addressing the challenges related to financing, compliance, rising costs, and skill gaps is essential for unlocking the full potential of SMEs. A recent report suggests that government policies should be tailored to meet the specific needs of different sectors within the SME landscape. Furthermore, promoting collaboration between SMEs and larger enterprises can foster innovation and knowledge sharing, contributing to the overall growth and competitiveness of the sector. Overcoming these hurdles will be crucial for ensuring that India’s SMEs continue to thrive and contribute to the country’s economic development.

May 22, 2025
Windsurf unveils SWE-1 AI model family
New AI models from Windsurf target entire software lifecycle

Windsurf, a pioneering technology firm, has just announced the release of its SWE-1 family of AI models, marking a significant leap forward in the application of artificial intelligence to software engineering. This new suite of models promises to revolutionise various aspects of the software development lifecycle, from code generation and testing to debugging and maintenance.
The SWE-1 AI Model Family: Core Capabilities
The SWE-1 family comprises several specialised AI models, each designed to address specific challenges within software engineering. Key capabilities include:
Code Generation: SWE-1 can generate code snippets and entire functions based on natural language descriptions, significantly accelerating the development process.
Automated Testing: The models can automatically create test cases and identify potential bugs, improving software quality and reducing manual testing efforts.
Bug Detection and Repair: SWE-1 can analyse code for vulnerabilities and suggest fixes, streamlining the debugging process and enhancing software security.
Code Understanding and Documentation: The AI model can comprehend complex codebases and automatically generate documentation, facilitating collaboration and knowledge transfer.
Impact on the Software Development Lifecycle
The introduction of SWE-1 has the potential to dramatically alter the software development lifecycle. By automating repetitive tasks and providing intelligent assistance, the models can free up software engineers to focus on more creative and strategic work. This leads to faster development cycles, improved software quality, and reduced costs.
Furthermore, SWE-1 can empower developers with limited experience by providing guidance and support, making software development more accessible to a wider range of individuals. The benefits extend beyond initial development, as SWE-1 can also assist with ongoing maintenance and updates, ensuring that software remains reliable and secure throughout its lifespan.
Technical Specifications and Training Data
The SWE-1 models are built on a foundation of cutting-edge deep learning techniques and trained on a massive dataset of code, documentation, and bug reports. This extensive training enables the models to understand the nuances of different programming languages and software architectures.
Windsurf has also prioritised explainability and transparency in the design of SWE-1. The models provide insights into their reasoning process, allowing developers to understand how they arrived at a particular solution or recommendation. This fosters trust and confidence in the AI’s capabilities and enables developers to fine-tune the models for specific use cases.
Future Developments and Applications
Windsurf plans to continue expanding the SWE-1 family with new models and features. Future development efforts will focus on improving the models’ ability to handle more complex software projects and integrating them with existing software development tools. The company also envisions SWE-1 being used in a variety of applications, including:
Low-code/No-code platforms: SWE-1 can empower citizen developers to create applications without extensive coding knowledge.
AI-assisted code review: The models can automate the code review process, identifying potential issues and ensuring code quality.
Software modernisation: SWE-1 can help organisations modernise legacy systems by automatically translating code to newer languages and platforms.
The release of the SWE-1 AI model family represents a major advancement in the field of artificial intelligence for software engineering. Windsurf’s innovative approach promises to transform the way software is developed, maintained, and evolved, ultimately leading to better, more reliable, and more secure software for everyone.
May 16, 2025
Tariff war pressures small businesses

Tariff conflict intensifies strain on MSMEs

The ongoing tariff war has significantly squeezed the profit margins of many small businesses. Increased import costs, resulting from tariffs on raw materials and finished goods, are directly eating into their bottom lines. For MSMEs, which often operate on tight budgets, these additional expenses can be devastating. Many are finding it difficult to absorb these costs without passing them on to consumers, which risks making their products less competitive.

One major area of impact is the rising cost of goods sold. Small businesses that rely on imported components or materials for their manufacturing processes are particularly vulnerable. The tariff war has disrupted supply chains, forcing them to seek alternative, often more expensive, suppliers. This not only increases their direct costs but also adds complexity and uncertainty to their operations.

Furthermore, the uncertainty surrounding global trade has made it difficult for small businesses to plan for the future. Fluctuating tariffs and the potential for further escalation make it challenging to forecast costs and revenues accurately. This can lead to delayed investments, reduced hiring, and a general reluctance to expand operations. The economic impact of the tariff war is felt most acutely by these smaller players, who lack the resources to weather the storm.

Several small businesses are also reporting decreased sales due to the increased prices of their products. As they are forced to pass on the higher costs resulting from tariffs, their goods become less attractive to price-sensitive customers. This decline in demand further reduces their profitability and can lead to job losses. The tariff war is creating a vicious cycle of rising costs, declining sales, and shrinking profits for many small businesses.
Challenges Faced
Beyond the immediate impact on profits, small businesses face a multitude of operational and strategic challenges as a direct result of the trade war. These challenges range from navigating complex regulatory changes to adapting to volatile market conditions, putting immense strain on their limited resources.

Navigating Regulatory Complexity

The constantly evolving landscape of tariffs and trade regulations presents a significant hurdle. Small businesses often lack the in-house expertise to interpret and comply with these changes, forcing them to rely on external consultants or spend valuable time deciphering complex legal documents. This diverts resources away from core business activities and adds to their overhead costs.

The administrative burden associated with tariffs, such as customs declarations and documentation, is also disproportionately heavy for MSMEs. Large corporations have dedicated teams to handle these tasks, but small businesses often rely on a single individual or small team, which can quickly become overwhelmed.

Adapting to Supply Chain Disruptions

The tariff war has caused significant disruptions to global supply chains, forcing small businesses to scramble for alternative suppliers and adjust their production processes. This can be particularly challenging for businesses that rely on specialised components or materials from specific regions.

Finding new suppliers often involves extensive research, negotiation, and quality control checks, which can be time-consuming and expensive. Moreover, alternative suppliers may not be able to offer the same prices or lead times as previous suppliers, further impacting profitability and competitiveness. The uncertainty surrounding future tariffs also makes it difficult for small businesses to commit to long-term contracts with new suppliers.

Access to Finance

The economic impact of the tariff war has made it more difficult for small businesses to access finance. Banks and other lenders are often hesitant to extend credit to businesses operating in uncertain environments, particularly those heavily reliant on international trade. This lack of access to capital can hinder their ability to invest in new equipment, expand their operations, or weather economic downturns.

The increased risk associated with lending to small businesses in the current climate has also led to higher interest rates and stricter lending terms, further burdening their finances. Many small businesses are forced to rely on personal savings or loans from family and friends to stay afloat, which can put them at greater financial risk.
Future Outlook
Looking ahead, the future for small businesses caught in the crossfire of the global trade tensions remains uncertain. Several factors will shape their prospects, including the duration and intensity of the tariff war, the ability of businesses to adapt to changing market conditions, and the availability of government support.

Scenario Planning and Adaptation

A crucial step for small businesses is to engage in scenario planning. By considering various potential outcomes of the trade war, they can develop contingency plans and strategies to mitigate risks. This might involve diversifying their supply chains, exploring new markets, or adjusting their product offerings to reduce reliance on tariff-affected goods. Flexibility and adaptability will be key to survival.

Furthermore, investing in technology and automation can help small businesses improve efficiency and reduce costs. This can make them more competitive in the face of rising input prices. Embracing e-commerce and digital marketing can also help them reach new customers and expand their market reach, reducing their dependence on traditional sales channels.

Government Support and Policy Measures

Government support will play a critical role in helping small businesses navigate the challenges posed by the tariff war. Measures such as tax relief, access to low-interest loans, and export assistance programs can provide much-needed financial relief and support their efforts to diversify into new markets. Streamlining trade regulations and reducing administrative burdens can also ease the compliance burden on MSMEs.

Moreover, government initiatives to promote domestic sourcing and support local industries can help small businesses reduce their reliance on imported goods and build more resilient supply chains. Investing in infrastructure and education can also improve their competitiveness and prepare them for the future of global trade.

Long-Term Implications for Global Trade

The ongoing tariff war has broader implications for the future of global trade. It is likely to accelerate the trend towards regionalisation and localisation of supply chains, as businesses seek to reduce their exposure to geopolitical risks. This could lead to a reshaping of global trade patterns and a shift in the balance of economic power. Small businesses need to stay informed about these trends and adapt their strategies accordingly.

The economic impact of the trade war may also lead to increased protectionism and a weakening of the multilateral trading system. This could create further challenges for small businesses, particularly those that rely on international trade. Building strong relationships with customers and suppliers, and diversifying their market base, will be essential for navigating this uncertain future.

May 14, 2025