By Dr. Gyan Pathak
World celebrated Micro, Small and Medium Enterprises (MSME) day on June 27, 2025. The celebrations have acquired a special significance this year since the world has a great task to create 600 million jobs needed by 2030 to absorb the growing global workforce. MSMEs employs for nearly 2.3 billion people globally, though it has been suffering from persistent barriers.
As for India, to address the job gap, the country will need to create between 90 million and 115 million jobs. IMF has even estimated it to be 148 million. Indian MSMEs employ a little over 110 million workers, accounting approximately 62 per cent of the total employment, in the formal sector.
At global level MSMEs account for 90% of businesses, 60 to 70% of employment and 50% of GDP worldwide. As the backbone of societies everywhere they contribute to local and national economies and to sustaining livelihoods, in particular among the working poor, women, youth, and groups in vulnerable situations. MSMEs hold the potential to transform economies, foster job creation, and promote equitable economic growth if given adequate support.
In emerging markets, most formal jobs are generated by SMEs, which create 7 out of 10 jobs. Nevertheless, access to finance is disproportionately difficult for smaller firms in the least developed countries (LDCs), with 41 percent of SMEs in LDCs reporting access to finance as a major constraint to their growth and development, by comparison to 30 percent in middle-income countries (MICs) and only 15 percent in high-income countries (HICs).
In his message UN Secretary general has called for unlocking full potential of MSMEs. He said, “We must invest in their success by increasing availability of affordable financing, opening market opportunities, and strengthening digital infrastructure and skills. … Together, let us commit to unleash the transformative promise of micro-, small-, and medium-sized enterprises as drivers for sustainable development and innovation.”
ILO Director General Gilbert F. Houngbo highlighted the crucial role of Micro-, Small and Medium-sized Enterprises in creating jobs and advancing social justice. He calls for bold, coordinated action to empower MSMEs through inclusive policies, better access to finance, skills, innovation, and decent work.
MSMEs are not merely engines of growth, they are also catalysts for social justice. By generating employment for nearly 2.3 billion people, particularly for women, for youth, and marginalized communities often excluded from formal economic structures, MSMEs are crucial in advancing inclusive growth, productive employment and decent work, Houngbo said.
Despite their vital role and prospects, MSMEs face persistent barriers. Globally, over half of MSMEs’ financing requests remain unmet, in stark contrast to just 7% for larger enterprises. In emerging economies, 70% of MSMEs lack affordable financing, thus hindering their growth potential, he said. The digital divide, shortage of skilled human capital, and poor working conditions further exacerbate their challenges, contributing to a productivity gap of nearly 70% compared to large firms, making them more vulnerable in times of crisis.
ILO believes that MSME are crucial for social justice. Their competitiveness and sustainability must go hand in hand with decent work and respect for fundamental principles and rights at work.
ILO has called for Stronger social dialogue to develop inclusive MSME policies; Tailored support to formalize enterprises and extend sustainable protections; Investments in skills, innovation, and digital access; And financing strategies that make capital more accessible to small enterprises, especially those led by women youth and underprivileged groups.
Here in India, MSME Day 2025 was observed as Udyami Diwas. ‘Udyami Bharat – MSME Day’ theme for 2025 focused on “Enhancing the role of MSMEs as drivers of Sustainable Growth and Innovation.” While government has showcased its achievement in the MSME sector, it is well known how this sector has been suffering since last decade.
One can just recall the budget speech of the Union Finance Minister Nirmala Sitharaman, who labelled MSMEs of India as the second engine in the growth story of India, and boasted of significantly helping the sector under PM Narendra Modi led government, and announced several new schemes for them. However, in reality the Centre has been cutting allocations for the Union Ministry of Micro, Medium and Small Enterprises since 2022-23, and the level of allocation for the financial year 2025-26 is still lower than actual expenditure in 2022-23. Definitions for all categories for MSMEs has also been changed to help bigger enterprises, while smaller ones have been struggling for help.
It should be recalled that the Centre has announced Employment Linked Incentives for employers in the Union Budget 2024-25, but it has miserably failed. Now the EPFO has extended the deadline for Universal Account Number (UAN) activation and Aadhaar seeding with bank accounts to June 30, 2025. MSMEs in India, are clearly not getting the government support that is required by them, and the ELI is an example.
Even the NITI Aayog report on “Enhancing MSMEs Competitiveness in India” delves into the array of challenges confronting MSMEs – ranging from financial constraints and technological gaps to skill shortages and regulatory hurdles. India must do more than merely celebrating MSME day. (IPA Service)
