Large businesses must help MSMEs upgrade, build competitiveness, says MSME secretary Khera
NEW DELHI: India’s vast base of micro, small and medium enterprises (MSMEs) need larger companies to do more than buy from them: they must help smaller suppliers upgrade technology, develop skills and move up the value chain, the government’s top MSME official said on Tuesday. The push comes as India seeks to expand manufacturing, raise export competitiveness and help smaller businesses withstand repeated global disruptions.
Bharat Khera, secretary, ministry of micro, small and medium enterprises, said the Centre’s production-linked incentive (PLI) schemes had helped create manufacturing champions that brought smaller vendors into their supply chains. Larger companies must now extend that support through technology transfer, innovation and vendor development, he said.
“There are many enterprises who have now become champions as a result of the production-linked incentive schemes offered in particular sectors. They have taken the entire value chain along, tier-II and tier-III vendors that are actually MSMEs…So this kind of skill development, this kind of enterprise development has to be nurtured by these bigger OEMs and big brothers,” said Khera.
“What is important is that the larger enterprises also play a nurturing role in promoting innovation, technology transfer, vendor development and supply chain integration,” Khera said.
Speaking at a Confederation of Indian Industry (CII) event in New Delhi, Khera urged larger businesses in the industry lobby group to support its smaller members. MSMEs account for around 80% of CII’s membership.
India had 97.4 million MSMEs as of October, according to the government’s Udyam portal. More than 99% were micro enterprises, with annual turnover below ₹10 crore. The registered number rose from 78.3 million in February to 97.4 million in October as the government pursued the formalization of smaller businesses.
Scale to competitiveness
The government introduced 14 PLI schemes in 2020 to boost domestic manufacturing across sectors ranging from textiles and bulk drugs to white goods and electric vehicles. Together, the schemes were designed to provide ₹1.97 trillion in supply-side incentives to manufacturers.
Khera said the government’s next priority would be to improve the quality of products made by Indian MSMEs and make them more cost-competitive. That would require better access to timely capital and wider technology adoption.
“Technology adoption has to become accessible to enterprises of all sizes,” Khera said, as artificial intelligence spreads across business operations and workflows.
For smaller businesses, however, the challenge extends beyond adopting new technology. Access to timely capital and delayed payments from clients have long constrained the sector, while repeated global disruptions have added to the pressure.
Global headwinds
Khera also urged businesses to make greater use of market access secured through India’s free trade agreements (FTAs). MSMEs now account for more than 50% of India’s exports, he said, highlighting the sector’s role in connecting smaller businesses to overseas markets.
India has signed trade agreements with Mauritius in 2021; the United Arab Emirates and Australia in 2022; the European Free Trade Association (EFTA) in 2024; the UK and Oman in 2025; and New Zealand in 2026, among others. The India-European Union (EU) FTA was concluded in January this year, while a bilateral trade deal with the US is also being worked out.
The opportunity comes as smaller businesses contend with shifting trade routes and higher input costs. The West Asia war this year forced exporting MSMEs to adjust to new and safer routes beyond the Strait of Hormuz and the Red Sea. Businesses that do not export directly have also faced higher energy and raw-material procurement costs as crude oil prices surged.
