Export performance of micro, small, medium and large enterprises of Indian manufacturing sector

• Published date: 01 May 2022
• Author: Sonali M. Mohapatra
• Date: 01 May 2022
• DOI: http://doi.org/10.1002/pa.2480

ACADEMIC PAPER

Export performance of micro, small, medium and large

enterprises of Indian manufacturing sector

Sonali M. Mohapatra

Post Doctoral Fellow in Economics, Institute of

Economic Growth, New Delhi, India

Correspondence

Sonali M. Mohapatra, Post Doctoral Fellow in

Economics, Institute of Economic Growth,

New Delhi, India.

Email: sonalieco@gmail.com

Funding information

Indian Council of Social Science Research

This article examines the export behaviour of micro, small, medium and large enter-

prises of the Indian manufacturing sector. The main finding of the study is that micro

and small industry groups' export performance is higher as compared to medium and

large industry groups. Foreign share and research and development expenditure have

a positive significant impact on export performance. Export promotion policies for

specific industries could be an effective means of protecting and promoting certain

manufacturing industries.

1|INTRODUCTION

Micro, small and medium enterprises (MSMEs) in the manufacturing

sector plays a prime role in the economic growth of India. This sector

has a huge potential to generate employment in a rural economy as

more than 50% of MSMEs set up in rural areas and it contributes to

reducing the income inequalities among people through huge employ-

ment generation (Ministry of MSMEs, 2019). This sector supports

entrepreneurs by providing the requirements and encourages standing

with their innovative ideas and creating employment opportunities.

The MSMEs significantly contribute to the economic growth and

export growth of a country. The role of this sector has also largely

emphasised in the context of rapid industrialisation, decentralisation,

and as an aspect of regional economic development. The MSME sec-

tor provides employment to over 111 million persons and the esti-

mated size of the number of this sector is more than 48 million. The

sector produces more than 6,000 products and it contributes about

8% to GDP. This sector contributes 45% of India's total manufacturing

output and 40% to the exports from the country (Ministry of

MSMEs, 2019). Despite these achievements, this sector faces a

number of obstacles in its path such as low technology and innova-

tion, inadequate access to concessional credit, and poor marketing.

In order to address these problems, Ministry of MSME has pro-

posed five schemes, namely Interest subsidy scheme for exporting

MSMEs, Market Development and Brand Building for MSME

exporters, Skill Development and Training for MSME exporters,

Establishment of export promotion fund and Building Institutional

structure for MSME exports to improve their production capacity

and exports.

Since the MSMEs are considered as the major contributor to the

Indian economic growth, it is significant to investigate the export per-

formance of MSMEs in the Indian manufacturing sector. The major

contributions of this paper to the literature are as follows: First, it

examines the export performance of MSMEs. Second, it compares the

export performance between MSMEs and large enterprises. Finally, it

examines the determinants of export performance of MSMEs and

large enterprises.

The remaining part is organised as follows: Section 2presents the

review of the literature. In Section 3, methodology and data are dis-

cussed. Section 4discusses the empirical results and in the final sec-

tion, concluding remarks are presented.

2|REVIEW OF LITERATURE

The research on MSMEs has grown substantially in India since some

decades. This paper reviewed some of the literature related to this

study Pant (1993) in his study export performance of Indian

manufacturing sector found that export is dependent on the firm and

industry-specific factors. Using OLS regression, results revealed that

foreign shares of big business are positively related to export perfor-

mance. Mali (1998) highlighted that MSMEs should focus on techno-

logical development, improvement of infrastructure, market

management and product diversification to cope with the scenario of

globalisation. Subramanya (2004) examined the impact of globalisation

and domestic reforms on the export of small-scale industries and

suggested that technological development and easier access to

finance should be emphasised. Allard et al. (2005) studied the

Received: 3 September 2020 Revised: 6 September 2020 Accepted: 8 September 2020

DOI: 10.1002/pa.2480

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https://doi.org/10.1002/pa.2480