Uttar Pradesh (UP) has emerged among the top three states in India as a significant contributor to India’s Micro, Small and Medium Enterprises (MSME) sector, with a 9% share in the country’s MSME landscape, according to Credai and CBRE South Asia’s recent report titled ‘MSMEs: Unleashing the Engines of Economic Prosperity’. The report underscores the crucial contribution of MSMEs in shaping India’s economy.
The report further highlights a regional concentration of MSME activity, with states such as Maharashtra, Tamil Nadu and Uttar Pradesh collectively constituting a substantial portion of the country’s MSME landscape. The three states account for nearly 40% of the total MSMEs registered in India. This emphasizes not only the diverse distribution of MSMEs across the nation but also the significance of these states in driving the overall vibrancy and economic impact of the sector.
Following policy initiatives have supported the MSME ecosystem in Uttar Pradesh:
- A 50% interest subsidy for micro units capped at Rs 25 lakh.
- Approved projects with 10 acre or more eligible for annual infrastructure interest subsidy of up to 50%, capped at Rs 2 crore annually.
- A 100% stamp duty exemption in select regions; also, women entrepreneurs and MSME industrial park developers.
Additionally, the report emphasizes the pivotal role played by the Udyam scheme, a government initiative designed to promote and foster the growth of MSMEs, particularly in Uttar Pradesh. The report explores the significant shifts underway in India’s MSME financing scene, driven by technological advancements and collaborative partnerships.
Several cities in Uttar Pradesh have emerged as MSME clusters, with Agra, Kanpur, Varanasi, Lucknow, Meerut and Ghaziabad leading in enrolling for the Udyam scheme. To further incentivize MSMEs, the Uttar Pradesh government has implemented a range of schemes. These strategic measures, complemented by the state’s proactive incentives, have been instrumental in driving the expansion of India’s MSME sector. In addition, by holding a significant position in the microsegment and establishing a robust presence in rural areas, the MSME sector is strategically positioning itself to meet the demands of rural markets and cater to low-income consumers. This strategic alignment positions the sector as a central force in alleviating regional disparities and promoting a more equitable income distribution.
Further, the report highlights the construction sector, contributing approximately 8% to the GDP, as a strategic opportunity for Indian MSMEs. With the construction sector poised to become the third largest globally in the next three years, unorganized firms in this domain are expected to derive significant benefits by registering under the MSME ambit. The integration of digitization, traditional banking systems and open protocols has created a more inclusive financing ecosystem, dismantling barriers for a broader segment of MSMEs. The collaboration between traditional banks and fintech firms serves as a key driver of this transformative journey, combining banking expertise with fintech agility and data-driven capabilities.
Anshuman Magazine, chairman, India, Southeast Asia, Middle East and Africa, CBRE, said, “As the MSME sector continues to play a pivotal role in shaping India’s economic tapestry, Uttar Pradesh’s emergence as a powerhouse reaffirms its significance in driving growth and reducing regional imbalances. The transformative shift in MSME financing, fuelled by technology and collaborative partnerships, is dismantling barriers and fostering a resilient, innovative entrepreneurial landscape. Together, strategic initiatives and technological advancements herald a future where MSMEs not only contribute substantially to GDP, employment and exports but also stand as beacons of inclusive and sustainable economic development.”
Boman Irani, CMD, Rustomjee Group, national president, Credai, stated, “Uttar Pradesh’s dominance in the MSME sector is a testament to the state’s vibrant entrepreneurial landscape and the efficacy of government initiatives. The Udyam scheme has been instrumental in fostering the growth of MSMEs, and the state’s strategic incentives have played a pivotal role in propelling India’s MSME landscape. The state’s position as a key contributor to India’s MSME sector underscores its potential as a catalyst for economic growth and job creation.”
“Similarly, the real estate sector, being a crucial driver of economic development and employment, requires streamlined regulations, skill development, and technology adoption. Collaborative efforts between the government, industry, and financial institutions are vital to provide the necessary support for sustained growth in both MSMEs and real estate, ensuring a robust, inclusive, and resilient economic future for India,” Irani added.
The nurturing of the MSME sector involves not only addressing existing challenges but also proactively fostering an ecosystem that encourages innovation and creativity. Initiatives that promote skill development facilitate technology adoption and streamline regulatory procedures can contribute significantly to the sector’s sustained growth. Moreover, collaborative efforts between the government, industry stakeholders and financial institutions can help create a robust support system, ensuring that the MSMEs receive the necessary resources and guidance to navigate the evolving economic landscape.
Policy incentives, including interest subsidy, infrastructure interest subsidy, stamp duty exemption and encouragement of women entrepreneurs along with support for MSME industrial park developers, have encouraged the MSME landscape in the state
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Dhwani is a content management expert with over five years of professional experience. She has authored articles spanning diverse domains, including real estate, finance, business, health, taxation, education and more. Holding a Bachelor’s degree in Journalism and Mass Communication, Dhwani’s interests encompass reading and travelling. She is dedicated to staying updated on the latest real estate advancements in India.
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