The systemic surgery smaller firms need
The Production-Linked Incentive (PLI) scheme has been credited for much of this revival. In July, minister of state for commerce and industry Jitin Prasada informed the Lok Sabha that PLI schemes, with an outlay of ₹1.97 lakh crore across 14 sectors, had attracted ₹1.76 lakh crore in investments by March. These resulted in production increases exceeding `16.5 lakh crore and generated over 12 lakh jobs.
Electronics—especially mobile phone manufacturing—and pharmaceuticals have emerged as consistent success stories. The PLI scheme helped India move from being a net importer of bulk drugs (₹1,930 crore in 2021-22) to a net exporter (₹2,280 crore in 2024-25).
This targeted strategy, aimed at fostering global champions and reducing import dependence, has undeniably positioned India as a serious manufacturing contender. Yet, a critical question lingers: in helping industrial giants, are we overlooking the micro, small, and medium enterprises (MSME)—the silent-but-vital engine of inclusive growth?
PLIs are designed to attract large-scale investments in high-tech industries with thresholds largely suited to established players. While their growth is vital for competitiveness and innovation, the benefits don't always reach the broader MSME ecosystem. This risks creating a dual economy—gleaming high-tech manufacturing hubs alongside a struggling MSME sector, much like the skyscrapers and slums of Mumbai.
MSMEs are not mere ancillary units. They form the bedrock of India's economic fabric. As per data up to July 2024, MSMEs contributed above 30 percent of India's gross value added. They are crucial to India's trade ambitions, accounting for 45.79 percent of India's exports in May 2024, with MSME exports surging from ₹3.95 lakh crore in 2020-21 to an impressive ₹12.39 lakh crore in 2024-25. Crucially, they remain the nation's foremost job creators after agriculture, employing an estimated 203.9 million people as of July 2024. Their reach extends deeply into semi-urban and rural areas, providing livelihoods and fostering decentralised economic development.
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