Linking Indian MSMEs And Women-Led Enterprises With Global Value Chains

MSMEs and women-led enterprises form the backbone of India’s economic growth. While Micro, Small, and Medium Enterprises (MSMEs) form the backbone of India’s economy, women-led enterprises are emerging as promising avenue for economic empowerment and inclusive growth.

The Economic Significance Of MSMEs And Women-Led Enterprises

India stands as one of the fastest growing economies in the world, charting an ambitious course with its vision to become a developed nation under the Viksit Bharat initiative by 2047.

In this fast-growing economy, MSMEs make substantial contributions to output and exports. In 2021-22, a third of India’s GDP was generated by MSMEs, and MSME contribution to exports stood at 46%. MSMEs are also amongst the largest employers in the country, particularly for women and other marginalised groups. According to Confederation of Indian Industries’ (CII) report on Linking Indian MSMEs and Women-led Enterprises with Global Value Chains, women-owned enterprises constitute about a fifth of India’s MSMEs, but are typically micro, informal, rural, and concentrated in sectors with low export potential. To foster this transition from local markets to global platforms, women-owned MSMEs need government support and private investment to enhance their economic potential and competitiveness. The roadmap for increasing women-owned MSMEs’ participation in global value chains (GVCs) requires clearance of structural barriers and leveraging opportunities for scaling these enterprises.

Setting The Context: Challenges Faced By Women-Led MSMEs

According to CIIs report, women owned MSMEs’ are primarily micro and predominantly rural, thereby being least likely to participate in trade. The report also highlighted two main challenges faced by women-owned MSMEs to participated in GVCs: barriers related to firm size and those related to trade processes.

Gender gaps in technical, digital, and business management skills along with limited access to finance and infrastructure, form major hindrance in growing firm size. Trade-specific barriers include challenges navigating complex tariff regimes, with many women lacking access to up-to-date information on international regulations. Digital export systems create additional hurdles due to limited technical knowledge and support. Women exporters struggle to access trade finance, which primarily flows through informal networks based on established relationships

To address these multifaceted challenges, a comprehensive ecosystem approach is needed that tackles both structural barriers and specific trade facilitation gaps.

Enhancing Women-Led MSMEs Participation In GVCs

To combat these challenges, the Ministry of MSMEs, Government of India has introduced several initiatives to support women MSMEs and enhance their participation in entrepreneurship and exports.  The Public Procurement Policy was amended in 2018 to mandate that 3% of annual procurement by Central Ministries, Departments, and PSUs be reserved for women-owned MSMEs. The Credit Guarantee Scheme provisions include a 10% concession in annual guaranteed fees and an additional 10% guarantee coverage for women entrepreneurs, raising the coverage to 85%.Furthermore, programs like  Mahila Coir Yojana, Prime Minister’s Employment Generation Program (PMEGP), MSME Innovative Scheme and SAMARTH initiative provide women entrepreneurs financial support, skill-building, and market access opportunities.

The Report Also Highlights Four Strategic Pillars As Way Forward

Pillar 1: Creating gender-responsive trade infrastructure and services to improve physical environment for women traders.

Pillar 2: Promoting access to markets, networks and trade facilitation to connect women entrepreneurs with domestic and global opportunities through programs like a flagship “Women in Trade” initiative.

Pillar 3: Skill training, capacity building and exposure visits to address knowledge and capability gaps through targeted training programs.

Pillar 4: Facilitating access to trade finance through dedicated trade finance funds for women MSMEs, creating group insurance schemes for women exporters, and building trust between women entrepreneurs and financial institutions.

The coming together of industry, government and policymakers is imperative to alleviate gender-specific barriers that these MSMEs face. While we work to establish India as the new manufacturing hub of the global world, women led MSMEs will play a crucial role in achieving the goal. India’s growth story stands on its ability to grow sustainably, equitably, representative, and inclusively.