MSMEs, Start-Ups and their Role in Global Value Chains: Opportunities and Challenges to the Indian Economy

Global Value Chains (GVCs) have become a central feature of international trade and production in the contemporary globalized economy. Instead of producing goods within a single country, production processes are now fragmented across multiple countries where each stage of production is performed in the most efficient location. In this evolving global economic environment, Micro, Small, and Medium Enterprises (MSMEs) and start-ups play a crucial role in strengthening national participation in global production networks. In India, MSMEs contribute significantly to employment generation, industrial output, and export performance. They represent nearly one of the most dynamic sectors of the economy and serve as important suppliers and service providers within domestic and international value chains. In recent years, the emergence of start-ups has further strengthened India’s entrepreneurial ecosystem by introducing innovation, digital solutions, and new business models. Government initiatives such as Make in India, Startup India, Digital India, and Atmanirbhar Bharat have created a supportive environment for MSMEs and start-ups to integrate into global markets. These initiatives focus on improving access to finance, promoting technological innovation, and facilitating exportoriented growth. However, despite their significant potential, MSMEs and start-ups face numerous challenges in integrating into global value chains. These include limited access to technology, inadequate infrastructure, financial constraints, and difficulties in meeting international quality standards. Addressing these challenges requires targeted policy support, improved institutional frameworks, and stronger collaboration between government, industry, and financial institutions.