MSMEs to Increase Workforce by 40% in Next Quarter Amid Skilled Labour Shortage

Around 30-40% of the Micro, Small, and Medium Enterprises (MSMEs) spread across manufacturing, services and trading sectors are planning to increase their workforce in the next quarter, according to a Small Industries Development Bank of India (SIDBI) report released on Wednesday. SIDBI's first ever MSME Outlook Survey, a quarterly analysis of MSME business sentiment for October-December 2024, also stated that the employment scenario was broadly steady during the study period with majority of respondents’ employee strength remaining unchanged.

"The expectations on the future, however, are bullish with 30-40% planning to increase their workforce in the next quarter. The optimism is more pronounced in the manufacturing sector and relatively sedate in trading," the report noted.

This pan-India survey with a sample size of about 1200 MSMEs also reported an improvement in business performance in the quarter ending in December. The MSMEs engaged in manufacturing activity were most positive with the services MSME-Business Conditions Index (M-BCI) for the manufacturing sector exhibiting the strongest business confidence reading of 60.33, closely followed by the Services M-BCI at 59.67, it said.

"M-BEI [MSME-Business Expectations Index] projects consistent optimism for the next four quarters, with indices above 60 and manufacturing even above 70, reflecting bullish sentiment on parameters like sales, profitability, and expectations of improved availability of skilled labour, access to finance and overall business situation," the report analysed.

Furthermore, majority of MSMEs are optimistic on sales growth buoyed by positive sentiment on order books, production and rise in selling price for the next quarter and a year ahead as well.

“The importance given to this sector by GOI is also evident from the fact that it has been identified as one of the four growth engines of the economy during the recent union budget," noted Manoj Mittal, chairman at SIDBI.

Notably, 46% in the manufacturing sector showcased a willingness to invest in environmental protection measures and adopt new technologies.

Labour productivity and skilled labour availability remain concerns, with one-sixth of respondents across all sectors expressing dissatisfaction.

Union Budget and MSMEs

The union budget for FY26 introduced a series of measures aimed at strengthening the sector. To help MSMEs scale operations and access better resources, the investment and turnover limits for classification have been increased by 2.5 times and 2 times, respectively. This is expected to improve efficiency, technological adoption, and employment generation.

It has also enhanced credit accessibility by increasing credit guarantee cover for micro and small enterprises from Rs 5 crore to Rs 10 crore, enabling additional credit of Rs 1.5 lakh crore over five years. A new customised credit card scheme will also provide Rs 5 lakh in credit to micro enterprises registered on the Udyam portal.

A Focus Product Scheme for the footwear and leather sector was announced to support design, component manufacturing, and non-leather footwear production, expecting to create 22 lakh jobs and generate a turnover of Rs 4 lakh crore, among others.