Problems Faced by Indian Micro, Small and Medium Enterprises (MSMEs)

Abstract

MSMEs are of particular significance to the Indian economy. This labour-intensive sector helps to maintain the socio-economic equilibrium. If the regulatory framework facilitates, they can reduce economic disparities at the regional level by employment generation, promoting economic independence, and helping in the sustainable development of the society. Despite a significant contribution to nation-building, MSMEs are not getting the necessary support from government agencies and financial institutions. Inadequate financing, deficient social infrastructure, managerial skills, and sudden shocks caused by economic and tax reforms are the issues that majorly affect the performance of small enterprises at different levels of their operations. Thus, this study has transacted to highlight the problems MSMEs facing in India. Through the quantitative approach, six different families of problems—namely marketing, finance, technology, raw material, labour, and management—have been identified. Each of the problem areas was categorised into internal and external issues. A detailed discussion has been made considering the impact of demonetisation, GST, and skill development programs on MSMEs. Subsequently, some suggestions have been made for improving the performance of MSMEs.