📋 Tender Overview
Description In India, there are an estimated 63.4 million MSMEs, contributing about 30% to the country's gross domestic product, 40% of exports and employing 111 million persons. Government of India is targeting to increase MSME output contribution to 50%, export contribution to 75% and employment to 150 million by 2024, in line with the target to make India a $5 trillion economy. The government has prioritized MSME promotion as part of NITI Aayog's Strategy for New India@75, with particular emphasis on (i) easing credit availability; (ii) supporting firms to adopt Industry 4.0 practices, especially technological upgradation to enhance productivity; (iii) facilitating integration of MSMEs with apprenticeship schemes; and (iv) supporting MSME clusters with common facilities to reduce costs and improve quality. The government's vision for MSMEs' transformation is constrained by the fact that the MSME sector in India is dominated by informal microbusinesses who lack the scale, experience, and resources to adopt latest technologies and professional business management tools for operational efficiency, and integrate with global value chains. Also, burdensome regulatory processes and insufficient institutional support for MSMEs' statutory compliances and capacity development exacerbate the operational environment for MSMEs.
Project Rationale and Linkage to Country/Regional Strategy
MSMEs have been more severely impacted due to their (i) lack of negotiation power with large business partners, (ii) limited access to financial and managerial resources, and (iii) dependence on regular operations for survival. It is reported that nearly 50% of MSMEs had witnessed a 20%50% decline in their earnings and faced severe financial constraint in May 2020. COVID-19 pandemic has induced urgency in the government initiatives given that economic revival is contingent on MSME sector recovery. To respond to MSMEs' support needs and promote economic recovery through MSME development, the government announced Atmanibhar Bharat Abhiyaan (Self-Reliant India Mission) in May 2020. Under the Mission, a number of measures have been announced for liquidity support to MSMEs, including a
3 trillion ($40 billion) credit guarantee facility. These financial support need to be efficiently channeled to MSMEs and thereafter effectively utilized for improving their business practices to seize opportunities under a 'new normal post-COVID-19.
Impact
Economic output and employment generation by micro, small, and medium-sized enterprises increased (Strategic Action Plan of the Ministry of MSME)
Outcome
Competitiveness of selected MSME clusters enhanced
Outputs
EDC/NRCE network established
MSMEs' access to enterprise development services enhanced
Strategic cluster development promoted
