Msmes, Start-Ups and Their Participation in Global Value Chains

The integration of firms into Global Value Chains (GVCs) has become imperative for economic development and competitiveness in the era of globalization. Global Value Chains (GVC) refers to the cross-border fragmentation of the production process where different stages of production are carried out in different countries. Micro, Small and Medium Enterprises are considered as the growth engines of economic growth, innovation and employment generation across the world. They contribute enormously to the value chains thereby offering specialized components, services and various innovative solutions to larger multinational firms. The contribution of MSME to the GDP, manufacturing output and export of the country is approximately 30%, 45% and 45% respectively. Start-ups such as Flipkart, Ola and Zomato refers to newly created innovative businesses with high growth potential that are usually driven by technology and entrepreneurship. The increasing participation of MSMEs and Start-ups in Global Value Chains (GVCs) can increase productivity, expand market access and facilitate technology upliftment. However, there are various challenges that restrict their effective participation in Global Value Chains (GVCs) some of which includes: limited financial resources, obsolete technology, lack of skilled and trained manpower and compliance with international quality standards. The paper seeks to examine the growth prospects of integrating Indian MSMEs and Start-ups into the Global Value Chain (GVCs). It also attempts to identify major challenges faced by MSME’s and Start-ups in participating in Global Value Chains. At the same time, the study recommends various strategies to strengthen MSMEs and Start-ups participation in Global Value Chains.