MSME share in India’s exports continues to decline; drops by 6% since FY20
In the financial year 2022-23, the share of exports of Micro, Small, and Medium Enterprises (MSME)-specified products in India’s total exports has continued to decline year-on-year. Despite the country’s overall exports, which include both merchandise and services, growing by an estimated 13.84 percent during this period, the proportion of MSME-specified goods in the overall exports has decreased.
According to data sourced from the Directorate General of Commercial Intelligence and Statistics (DGCIS), Bhanu Pratap Singh Verma, the Minister of State in the Ministry of Micro, Small and Medium Enterprises (MSME), provided this information in a written reply to a question posed in the Rajya Sabha (the upper house of India’s Parliament). In his response, the minister indicated that the share of MSME-specified products in the entirety of India’s exports amounted to 43.6 percent for the fiscal year 2022-23.
This data suggests that despite the growth in India’s overall exports, the contribution of MSME-specified products to the country’s export portfolio has declined. This trend could potentially have implications for the MSME sector’s role in the country’s export economy, as well as for policy considerations to support and enhance the competitiveness of this sector in global markets.
For the most accurate and comprehensive understanding of this data and its implications, it is advisable to refer to official sources such as government publications, press releases, and reputable economic analysis reports.
The declining trend in the share of exports of Micro, Small, and Medium Enterprises (MSME)-specified products is evident from the data provided. Here’s a breakdown of the information you mentioned:
– In the financial year 2022-23 (FY23), the share of MSME-specified goods in India’s overall exports was 43.6 percent. This is down from:
– 45.03 percent in FY22
– 49.35 percent in FY21
– 49.77 percent in FY20
Despite the decrease in the share of MSME-specified products in the export mix, the value of MSME exports has shown an increasing trend:
– The value of MSME exports:
– Increased to $190 billion in FY22
– Was $143.9 billion in FY21
– Was $154.8 billion in FY20
It’s worth noting that this decline in export share is contrary to the target set by former MSME Minister Nitin Gadkari in 2020. He had aimed to increase MSMEs’ share in India’s exports to 60 percent within a span of five years.
This data highlights the complex interplay of various factors that influence the export performance of the MSME sector, including global market dynamics, competitiveness, policy support, and economic conditions. The goal of increasing the MSME sector’s share in exports to 60 percent, as set by the government, seems challenging given the observed decline in recent years. It would require targeted strategies, policy interventions, and concerted efforts to enhance the export capabilities of MSMEs.
The composition of the Micro, Small, and Medium Enterprises (MSME) sector’s share in India’s total exports is nuanced. It’s important to note that this share doesn’t solely consist of goods produced exclusively by MSMEs; it also includes contributions from larger enterprises. Prafulla Chandra Mishra, the Statistical Advisor at the Directorate General of Foreign Trade (DGFT) under the Department of Commerce, highlighted this distinction.
Mishra addressed the SMExports Summit organized by Financial Express Digital in February, where he explained that the share of the MSME sector in India’s total exports encompasses goods from both MSMEs and larger enterprises. He mentioned that there’s a differentiation between exports of goods that are manufactured by MSMEs and goods that are related to MSMEs based on the tariff codes or ITC-HS (Indian Trade Clarification based on Harmonized System) codes. However, he pointed out that there is no specific way to exclusively distinguish ITC-HS codes that are exclusively reserved for MSMEs.
This underscores the complexity of accurately delineating the exact contribution of MSMEs to India’s export figures. The share of the MSME sector in exports includes a mix of goods produced by MSMEs themselves as well as those that are related to or associated with the MSME sector, regardless of the size of the producing entity. This differentiation can be challenging due to the absence of specific codes reserved solely for MSME-produced goods in the tariff classification system.
Understanding the nuanced nature of these statistics is crucial when interpreting data related to the contributions of MSMEs to India’s export economy. It’s advisable to consult official government sources, trade databases, and experts in the field for a comprehensive and accurate understanding of these dynamics.
The complexities of differentiating between goods produced by Micro, Small, and Medium Enterprises (MSMEs) and those related to MSMEs are further illustrated by the specific data you’ve provided:
– For MSME-related exports, a total of 454 items at the ITC-HS four-digit level were identified out of a total of 1,218 ITC-HS items. This identification process was conducted by the MSME ministry in coordination with the Directorate General of Commercial Intelligence and Statistics (DGCI&S) and the Directorate General of Foreign Trade (DGFT).
– In terms of value, the country’s “MSME-related export” amounted to $189,768 million during FY22, compared to $143,823 million during FY21, reflecting a significant growth rate of 31.9 percent.
However, despite the positive growth in MSME-related exports, there is a notable decline in the share of exports for items that are reserved for manufacturing by MSMEs or are exclusive to MSMEs:
– In FY21, the share of such exports in India’s total exports was 9.1 percent, amounting to $26.4 million.
– This share decreased to 7.7 percent in FY22, totaling $32.6 million.
While the decline in the share of exports related to items exclusively reserved for or produced by MSMEs might be seen as a matter of concern, Prafulla Chandra Mishra, the Statistical Advisor at DGFT, noted that the decline isn’t extremely significant.
These figures underscore the complexity in accurately categorizing and measuring the contributions of MSMEs in India’s export landscape. The data points out the need for clear and standardized classification systems that can accurately differentiate between goods produced by MSMEs and those related to the MSME sector. Policymakers and analysts may use this information to identify areas of improvement and to develop strategies to enhance the export potential of MSMEs.
The value of India’s total exports, including both merchandise and services, has shown an upward trend over the last five years, according to the data presented by Anupriya Patel, the Minister of State in the Commerce Ministry. Here’s a breakdown of the provided information:
– In FY19, the overall exports amounted to $538 billion.
– This figure increased to $676 billion in FY22.
– Further growth was observed, with the value of exports reaching $776 billion in FY23.
However, it’s worth noting that while there has been substantial growth in overall exports over the years, the latest available data shows a decline in both exports and imports for the month of June 2023 when compared to the same month in the previous year:
– The estimated value of overall exports in June 2023 was $60.09 billion, reflecting a negative growth of minus 13.16 percent compared to June 2022.
– The estimated value of overall imports in June 2023 was $68.98 billion, exhibiting a negative growth of minus 13.91 percent compared to June 2022.
These figures indicate a temporary contraction in trade, as the negative growth rates suggest a decrease in both export and import values for June 2023 compared to the same period in the previous year. This contraction could be influenced by a range of factors, such as global economic conditions, supply chain disruptions, trade policies, and other external and internal dynamics.
