Empowering Karnataka’s MSMEs: Dr. Vijayamahantesh B Danammanavar’s Vision for Sustainable Growth and Innovation

In an inspiring and comprehensive address at the celebration of World MSME Day at The Capitol Hotel, Bangalore, Dr. Vijayamahantesh B Danammanavar IAS, Director (MSME), Department of Industries and Commerce, Government of Karnataka, laid out an ambitious and strategic vision for the future of Micro, Small, and Medium Enterprises (MSMEs) in Karnataka. Speaking to a distinguished gathering of industry leaders, entrepreneurs, and dignitaries, Dr. Danammanavar emphasized the crucial role of MSMEs in driving economic growth, fostering innovation, and ensuring sustainable development.

Global Significance of MSMEs

Dr. Danammanavar began by recognizing the global importance of MSMEs, stating that these enterprises account for approximately 50% of the global GDP, represent around 90% of businesses, and contribute to 70% of employment worldwide. He highlighted the United Nations General Assembly’s resolution, now in its seventh year, which acknowledges the tremendous potential of MSMEs. This resolution underscores the pivotal role these enterprises play in the global economy.

India’s Economic Ambitions and the Role of MSMEs

Dr. Danammanavar detailed India’s ambitious economic goals, aiming to become a $10 trillion economy by 2030. Karnataka, in alignment with this national vision, seeks to achieve a trillion-dollar economy by 2032. He affirmed that MSMEs are essential to realizing these objectives, contributing significantly to sustainable, equitable, and inclusive growth. Their role in boosting productivity, creating employment opportunities, and fostering innovation is indispensable.

Evolution of Karnataka’s MSME Ecosystem

The speech highlighted the evolution of Karnataka’s MSME ecosystem over the past two decades. MSMEs have been instrumental in the state’s economic and social development, promoting entrepreneurship and generating large-scale employment opportunities at comparatively lower capital costs. Karnataka is home to approximately 1.5 million registered MSMEs, with micro-units making up 95% of this total and contributing to 80% of employment. MSMEs also account for around 40% of the state’s tax revenues, amounting to roughly ₹48,000 crores.

Challenges and Opportunities

Dr. Danammanavar acknowledged the persistent challenges faced by MSMEs, including limited access to markets, credit, technology, and skills. He shared findings from a baseline assessment survey conducted under the Raising and Accelerating MSME Performance (RAMP) program, funded by the World Bank. The survey revealed significant obstacles, such as:

• Market Access: 38% of MSMEs face challenges in accessing markets, 56% have not availed marketing support under central or state government schemes, and 63% face limited availability of business development service providers.
• Credit Access: 74% face challenges in providing collateral security, 41% find the procedure cumbersome with unclear documentation requirements, and 21% consider borrowing interest rates too high. Additionally, 56% have not availed financial assistance under central schemes.
• Technology Access: 47% use manual machinery for production, 50% lack capital for adopting innovative technologies, and 60% lack confidence to adopt new technologies.
• Skilling: 32% lack awareness about new sector skills, 36% lack technical and soft skills, and there is limited linkage between district industry centers, industrial training institutes, sector skill councils, and industrial clusters.
• Digital Ecosystem: 57% lack awareness about digital technologies, 32% lack awareness about digital marketing, and 39% use third-party websites for marketing their products.

Strategic Interventions and Support

To address these challenges, the Government of Karnataka has introduced several strategic interventions and sector-specific policies, including the Aerospace Policy 2022-2027, Karnataka EV Policy, and Coir Policy. These policies aim to promote MSMEs by providing targeted incentives and concessions.

Financial and Infrastructure Support

The Karnataka State Financial Corporation has pioneered credit provision to MSMEs under various schemes. This year, the government announced a significant initiative to reimburse MSMEs for tapping into capital markets, providing a boost to those transitioning from micro to small and small to medium enterprises. Additionally, the government has allocated funds to upgrade infrastructure in industrial areas, enhancing the overall ecosystem for MSMEs.

Export Promotion and Digital Ecosystem

Karnataka’s commitment to export promotion and diversification is evident, with the state ranked third in the Niti Aayog’s Export Preparedness Index for 2022. The government conducts export promotion workshops and provides market development assistance. Furthermore, plans are underway to develop a state-of-the-art MSME portal, creating a one-stop platform for the entire MSME ecosystem, facilitating easier access to resources, support, and information.

Empowering Women and Promoting Inclusive Growth

Dr. Danammanavar placed a strong emphasis on empowering women entrepreneurs. The state aims to develop 50,000 self-help group micro-enterprises over the next two years. Additionally, the Women Acceleration Program under the RAMP initiative focuses on business growth, capacity building, mentoring, and networking for women-led enterprises. Karnataka’s existing policies already provide extra incentives for women entrepreneurs, and these new initiatives aim to further bolster their contributions to the economy.

Looking Ahead

Dr. Danammanavar expressed his gratitude to the Global Council for the Promotion of International Trade and the Confederation of Indian MSMEs for organizing the event. He congratulated the winners of the National MSME Awards and reiterated the government’s unwavering commitment to supporting the MSME sector in Karnataka.

Dr. Danammanavar’s vision for MSMEs is a testament to the transformative potential of this sector. By addressing challenges, fostering innovation, and promoting inclusive growth, Karnataka is poised to build a stronger future together, leveraging the power of MSMEs to achieve economic prosperity and social development. The government’s proactive measures and strategic interventions aim to create a thriving ecosystem where MSMEs can flourish, driving the state towards its ambitious economic goals.

A Collaboration for Success

The Confederation of Indian Micro, Small and Medium Enterprises expresses its sincere gratitude to the Development & Facilitation Office, Government of India, Bangalore, for their partnership in making this event a resounding success. Additionally, the co-presenters, Global Council for the Promotion of International Trade, Nutty Treats and Foods Pvt Ltd, Vivamoney Solutions Pvt Ltd, and Owlsurf Digital, are acknowledged for their invaluable support.