The MSME sector in India has been directly generating employment for more than 4.5 crore people directly and additional 6 crores in the allied sectors and has contributed to a turnover of over US$ 6.55 billion. This sector employs the largest women workforce, accounting for 73% of the total worker power!
And yet the MSME sector has been facing massive challenges in terms of lack of proper funding, delays in cash flows etc. which have led to increasing unemployment, leaving the new generation firms without much commercial upkeep opportunities.
What is the new MSME Definition Criteria?
The Union Cabinet of India green flagged the revision of MSMEs definition, in 2020. This definition is based on turnover and investment size.
MSME is an acronym for Micro Small Medium Enterprise.
- Micro Enterprise — Investment up to Rs. 1 crore & turnover less that Rs. 5 crores
- Small Enterprise — Investment up to Rs. 10 crores & turnover less than 50 crores
- Medium Enterprise — Investment up to Rs. 50 crores & turnover less than Rs. 250 crores
Major Challenges Faced by the Textile MSME Sector
One of the major challenges faced by enterprises in this sector is the recent Tax Structure (GST), which makes sourcing and overall production & selling expensive. Some other issues faced by the textile sector in India are:
Apparel Export Decline
India’s total textile and apparel exports for April-December 2022 contracted almost 11.6%, according to the data available. In 2021, the country’s total textile & apparel exports contracted to 11.6% & in December, the exports shrank to 21.5% in December 2022.
This kind of shrinkage leads to massive economic impoverishment, closure/disruption of MSMEs at a wide scale and heavy unemployment rates.
Rising Cost of Raw Materials
Short supply of Raw Materials due to unit shutdowns in China & Europe. There is a low production of cotton in India & this is adversely impacting the prices of raw materials in the industry.
With increasing turbulence in the Textile Industry, it becomes all the more prudent to have a futuristic & sustainable point of view, which demands a gradual scaling of enterprises. In the current economic scenario when companies are struggling to stay afloat with cash flow discrepancies, sustainable alterations are a distant dream.
And this is where financial support systems like ReshaMudra come in. Credit Assistance has become very important in the current times for many MSMEs and it is time to break the conventional barriers of seeking credit support by understanding the mechanism better. Read here to understand how ReshaMudra helps businesses come out of the economic slump!
Our vision is to be your best partner in your journey toward success. Download the ReshaMandi App to avail Reshamudra or call +91 9901300605 for more details.