In Bharat, a nation renowned for its vibrant and dynamic entrepreneurial ecosystem, the significance of entrepreneurship is particularly pronounced. The Government adopted various measures under the new economic policy to develop the industrial sector. The Aatmanirbhar Bharat Mission (Self-Reliant Bharat) was launched with a broad stimulus package to revive the economy of Bharat after the disruptions caused by the COVID-19 pandemic. The Aatmanirbhar Bharat package was a mix of fiscal, monetary and structural reforms aimed at long-term economic self-reliance.
Introducing Structural Reforms
The structural reforms under Aatmanirbhar Bharat were classified into three main areas, namely, privatisation of public sector units (PSUs) and increasing Foreign Direct Investment (FDI) limits in sectors like defence and labour reforms aimed at creating flexible labour laws to attract investment. The reforms were intended to make Bharat a global manufacturing hub through job creation, import substitution through boosting domestic production, social welfare and attracting foreign investments. This mission emphasised building a self-sufficient economy through reforms, infrastructure investments and regulatory changes. This comprehensive package included fiscal support, liquidity measures and monetary policy interventions by the Government and the Reserve Bank of India. The Government announced various schemes to encourage MSME clusters across Bharat, focusing on crafts, textiles and agro-based industries.
Common Facility Centres (CFCs) were proposed to help MSMEs to share resources, lower production costs and improve productivity in clusters. The package addressed both short-term and long-term structural reforms in various sectors like MSMEs (Micro, Small and Medium Enterprises), agriculture, defence, power and mining. MSMEs were particularly crucial in the Aatmanirbhar vision, with nearly Rs 5 lakh crore earmarked for collateral-free loans. The loans had a 100 per cent Government guarantee to mitigate the risk for lenders and ensure easy access to credit for MSMEs. This helped MSMEs in States such as Maharashtra, Tamil Nadu and Gujarat to scale their operations and sustain employment during the economic downturn caused by COVID-19.
Credit-Linked Subsidy
A credit-linked subsidy is offered for the establishment of new microenterprises in the non-farm sector under the Prime Minister’s Employment Generation Programme. For projects up to Rs 50 lakh in the industrial sector and Rs 20 lakh in the service sector, a margin money subsidy is offered that ranges from 15 per cent to 35 per cent of the project cost. The margin money subsidy for recipients who fall under specific categories, such as women, is 35 per cent in rural areas and 25 per cent in urban ones. (GOI, 2024). The collateral-free loans provided a much-needed liquidity boost to businesses, especially those struggling to meet operational costs during the pandemic. States like Maharashtra (2, 47,318 enterprises), Tamil Nadu (2, 16,482 enterprises), Gujarat (1,92,707 enterprises), and Uttar Pradesh (1,19,484 enterprises) have the highest number of registered enterprises till 2022. These States have a strong industrial base and are key contributors to the growth of MSMEs, where MSMEs receive significant support through collateral- free loans and equity funds.
Role of Women
The role of women in MSMEs is emphasised by their employment in these enterprises. States like Tamil Nadu (1,113,645 women), Karnataka (448,112 women), and Maharashtra (464,076 women) till 2022 show a large proportion of women employees, indicating their critical involvement in sectors like handloom and handicrafts, which are traditionally labour-intensive and employ a large number of women. The ratio of women employed per enterprise is particularly high in States like Arunachal Pradesh (696 per cent) and Andhra Pradesh (377 per cent), indicating that these enterprises employ a substantial number of women in traditional sectors. This suggests that Government interventions like the Production-Linked Incentive (PLI) scheme for textile clusters and other MSME-centric reforms have successfully promoted gender inclusion in these industries. Conversely, States like Rajasthan (115 per cent) and Lakshadweep (180 per cent) show lower ratios, suggesting a relatively lower focus on women’s employment. Many small businesses benefited from the emergency credit and were able to sustain their operations. Creating a Rs 50,000 crore equity support was aimed at providing equity support to MSMEs with growth potential (https://dcmsme.gov.in). This helped MSMEs scale their operations and enhance their capacities. Textile clusters played a significant role in exports of Bharat and were given attention in the package, particularly through the Production-Linked Incentive (PLI) scheme. The PLI scheme and electronics manufacturing initiatives are expected to encourage the growth of entrepreneurial clusters in these high-tech sectors. Agriculture was supported with reforms in agricultural marketing, contract farming, and removing barriers in interstate trade of farm produce, aiming to boost farmer incomes. The package emphasised the development of agricultural clusters, especially in the food processing sector, and the development of farmer-producer organisations (FPOs).
To boost handloom and handicraft clusters, the Government initiated steps to integrate modern technology and e-commerce into these sectors, providing artisans with better market reach. However, the long-term recovery of small businesses is influenced by a broader economic recovery, which is yet to be addressed under the package. Academicians aim to promote entrepreneurship in Bharat by raising awareness, strengthening infrastructure, simplifying regulatory frameworks, improving credit access, introducing entrepreneurship-oriented courses, fostering innovation, and setting up entrepreneurial service provider centers. Much of the package was directed towards liquidity support, with RBI measures including lower interest rates and loan moratoriums. Nirmala Sitaraman, Finance Minister of Bharat, unveiled 4th traces of stimulus to help achieve the goal of Aatmanirbhar Bharat. Under this initiative, structural reforms were announced in sectors like coal, defence production, airspace management, and minerals. The defence sector opened up to greater private sector participation under the Aatmanirbhar Bharat package, which is expected to develop specialised clusters for defence manufacturing. The package also included welfare measures like free food grains for migrant workers and direct cash transfers to vulnerable populations. The Aatmanirbhar Bharat package aims to make Bharat’s industries more competitive in global markets by promoting export-oriented clusters. Specific export-focused clusters were set up for industries such as gems and jewellery, leather, and textiles to increase Bharat’s share in global trade. In 2020, Foreign Direct Investment (FDI) ceiling in the defence sector was increased by up to 74 per cent through the automatic route for companies seeking new defense industrial licenses and up to 100 per cent through the Government route if it is anticipated to result in access to modern technologies. So far, Rs 5,077 crore worth of FDI has been reported by companies operating in the defence sector (GOI 2024). To reduce dependency on imports, the Government announced a ban on the import of certain defence items and planned to promote domestic manufacturing. The visualisation of the Ordnance Factory Board (OFB), a crucial player in defence production, will aid in its efficiency. The Government announced plans to increase its usage, allowing airlines to reduce flying costs and improve efficiency, along with six more airports slated for auction on a public-private partnership (PPP) basis. To boost space and atomic energy, the government encourages private sector participation in space activities and collaboration with ISRO (Indian Space Research Organisation). Coal mining was opened up to the private sector, removing the government monopoly on mining and making it more competitive. This was aimed at boosting production and reducing reliance on imports. The package also included steps to encourage private investment in mineral exploration and mining. The government proposed that power distribution companies in Union Territories would be privatised to improve efficiency and ensure uninterrupted supply, simplifying and improving ease of doing business in these sectors to attract more investment. Reforms in labour laws, simplified tax regimes, and streamlined approval processes are intended to facilitate the ease of doing business. Infrastructure development is central to economic clusters, with the Government focusing on creating industrial corridors, logistic parks and smart cities. These infrastructure clusters are designed to improve connectivity, reduce logistical costs and support the growth of industrial clusters across regions. The mission’s emphasis on reforms and reducing foreign dependency could have a transformative effect on Bharat’s economic landscape, promoting growth in manufacturing, improving infrastructure and attracting investments. Despite the measures, a large number of unorganised MSMEs, especially in rural and informal sectors, struggled to access the benefits due to a lack of formal banking channels and limited awareness.
The article demonstrates the shift of Bharat from crisis management to structural transformation, combining fiscal, monetary, and structural reforms for the long-term self-reliance of Bharat. It effectively explains the cluster-based approach by covering employment patterns (especially women’s participation), State-wise distribution, structural reforms, support mechanisms and related challenges. Bharat’s Aatmanirbhar Bharat Mission has significantly promoted entrepreneurship in sectors like MSMEs, agriculture, defence, textiles and agro-based industries. The Government’s stimulus package, including fiscal, monetary and structural reforms, aimed to support these sectors and make Bharat self-reliant. However, challenges such as limited access to formal banking channels for unorganised MSMEs. Many unorganised MSMEs, especially in rural and informal sectors, struggled to access the benefits due to a lack of formal banking channels and limited awareness of the available schemes. Despite these challenges, the Aatmanirbhar Bharat Mission has laid a strong foundation for economic resilience through targeted support, structural reforms and the development of industrial and agricultural clusters.
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