MSME sector is the biggest contributor to India's GDP: Nirmala Sitharaman

Small and medium enterprises are the largest contributors to India's GDP, Finance Minister Nirmala Sitharaman said Thursday. She also emphasised the need for adequate skilling of the MSME workforce to ensure inclusive growth as India pursues its Viksit Bharat @2047 vision.

“India's biggest contributor to the GDP is the MSME sector… Our path towards Viksit Bharat is not just going to be based on some infrastructure, a nominal improvement in the training of our human resource but [only if] there is a seasoned look into what quality management is and at what levels and to which wings of manufacturing or service sector the interventions are required,” Sitharaman said.

Speaking at the annual symposium of the Indian Foundation for Quality Management (IFQM) on Thursday, she added that the biggest challenge facing India today was harnessing its demographic dividend by upskilling the workforce.

“I think the biggest challenge for India, particularly when we are periodically reminding ourselves that we have an advantage of demographic dividend, is we also have to periodically remind ourselves that we need to attend to the skilling requirement or else industry will be hard pressed for human resource and we will not get the advantage of the demographic dividend,” she added.

In this regard, Sitharaman highlighted the government’s efforts to earmark part of the budget for workforce skilling, including transforming Industrial Training Institutes (ITIs) into AI-driven training centres.

“In every budget we have made sure that in the last 2-3 years we made a provision for skilling our manpower and just not through some training courses but engaging with different authorities who seem to have a good plan on skilling,” she said.

She shared that of the 235 MSME ministry-identified clusters, the Small Industries Development Bank of India (Sidbi) is physically present in around 150, despite digital banking already being there. The Centre did this just to ensure that a direct credit facility is available to the MSME clusters.

While these clusters have their specialisation industry figured out and training is provided on their own, she pushed for the need to engage at these cluster level to ensure training is imparted.

“Now, in these clusters, we have already started a programme which has been taken out in some states yet, or in the process will be taken out in some others. These clusters have their own specialisations and [that] largely depends on the other industrial ecosystem that pervades in that state. But, my keenness has been to work with [MSME clusters] to make sure that they offer the training that they offer. It is a very interesting model because the clusters' requirement for manpower and upskilling are all taken on board while they provide the training. They train more than what they need and those left out after being employed are available in the market for others to benefit from,” she said.

She thus said that a lot needs to be done at the ground level, and can be done only with the engagement of the industry.

“With seasoned inputs from industrial leaders, this intervention can be a very powerful catalyst towards greater and better production in India including the quality of services in India. If [industry leaders] can at least in a few centres work together with the government, there will be a (far better) synergy and from there on the government too can sharp its focus on the kind of training it wants to offer for skilling,” she added.