Why MSMEs matter

Small businesses matter to India in many ways.

• Balanced regional development: they spread industry across the country, which helps check migration from villages to cities.
• Share of industry: small industries make up about 95 per cent of all industrial units in India.
• Employment: they are the second largest employers in the country, after agriculture.
• Labour-intensive: they use more workers and less capital, so they create more jobs per unit of capital than large industries.
• Fairer incomes: by spreading ownership and jobs widely, they help reduce inequality of income.
• Variety of products: from mass consumption goods to electronic items; and much of India's handicraft exports come from them.
• Entrepreneurship: they give people a chance to start something of their own and use their own skills.
• Low cost of production: they use local resources and need little to set up.
• Quick decisions: they can decide and adapt fast, and keep close, personal relations with customers and workers.