Nearly 40% fall in MSME accounts, as several units cross defined threshold with rise in economic activity: SBI Report
Various MSME business models have succeeded in becoming mid-size corporates in the last one year, stated the report.
The number of Micro, Small and Medium Enterprises (MSME) accounts fell by nearly 40 per cent between 2020-21 and 2021-22, but that indicates that the SME units are becoming larger with the rise in economic activity, says the recent State Bank of India (SBI) report on MSME sector in India. The study conducted by the bank reveals that the number of MSME accounts fell from 4.2 crores in 2020-21 to 2.6 crore in 2021-22, while the credit flow to the sector was up by 20 per cent within this time period.
“Beginning FY22, there is evidence of MSME units getting bigger with several units crossing the threshold of Rs 250 crores turnover and turning midsized corporates by the new definition of MSME units. Interestingly, the data indicate that all the SME units are becoming larger with the rise in economic activity,” stated the report.
As defined by the Ministry of Micro, Small, and Medium Enterprises, a business having an investment and turnover of over Rs 50 crore and Rs 250 crore will not be under MSMEs and will fall under mid-size corporate.
“There is clear evidence MSME units are becoming larger with several units crossing the threshold of Rs 250 crores turnover and turning midsized corporate by the new definition of MSME units. This reveals the integration of MSME units with larger value chain as PLI activity is getting momentum,” the report added.
The report came a few weeks after MSME Business Confidence Study conducted by NeoGrowth, an MSME-focused digital lender, revealed that 96 percent of MSMEs expect profits to increase in 2023.
Although, the SBI report has also highlighted the fact that as many micro-units may not have been able to register as MSMEs due to the paperwork involved and thus remained out of the MSME ambit.
To minimize the complications and ensure the more small-scale business gets registered, Government has recently launched the Udyam Assist Platform (UAP), developed by SIDBI, to bring all the Informal Micro Enterprises (IMEs) into the formal ambit.
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