Share of MSME Exports in India’s Total Exports Continues to Decline, Raising Concerns for Export Economy
India’s export economy is facing concerns as the share of Micro, Small, and Medium Enterprises (MSME) exports experiences a decline year-on-year. Despite overall export growth of 13.84 percent during the financial year 2022-23, the proportion of MSME-specified goods in India’s total exports has decreased.
Data sourced from the Directorate General of Commercial Intelligence and Statistics (DGCIS) reveals that the share of MSME-specified products in India’s exports accounted for 43.6 percent in the fiscal year 2022-23. This decline in MSME exports raises potential implications for the country’s export economy and the need for policy considerations to enhance the competitiveness of the MSME sector in global markets.
Former MSME Minister Nitin Gadkari had set a target to increase MSMEs’ share in India’s exports to 60 percent within five years. However, the recent data indicates a contrasting trend with a decrease in the share of MSME-specified products in the export mix.
While the value of MSME exports has shown growth, accurately quantifying the exact contribution of MSMEs to India’s export figures is complex. The share of the MSME sector in exports encompasses goods produced by both MSMEs and larger enterprises, making it challenging to exclusively differentiate between the two.
Regarding the specific data provided, there were 454 MSME-related items identified out of a total of 1,218 ITC-HS items. Although MSME-related exports exhibited significant growth of 31.9 percent in FY22, there was a decline in the share of exports reserved for manufacturing by or exclusive to MSMEs.
Despite the decline, policymakers and analysts can utilize this information to identify areas for improvement and develop strategies to enhance the export potential of MSMEs.
India’s overall exports, including merchandise and services, have seen an upward trend over the past five years, reaching $776 billion in FY23. However, recent data for June 2023 indicates a negative growth rate in both exports and imports compared to the same month in the previous year.
The declining share of MSME exports raises concerns for India’s export economy and calls for targeted strategies and policy interventions to enhance the export capabilities of MSMEs. Accurate classification systems and a nuanced understanding of the contribution of MSMEs are crucial for developing comprehensive policies and fostering the growth of this sector in the global market.
In conclusion, the declining share of MSME exports in India’s total exports highlights the need for focused efforts to support and enhance the competitiveness of the MSME sector. By implementing targeted strategies, policymakers can address the challenges faced by MSMEs and promote their growth, thereby benefiting India’s export economy in the long run.
