MSMEs and Global Value Chains in India: Opportunities, Challenges, and Policy Imperatives

Micro, Small and Medium Enterprises (MSMEs) form the economic backbone of India. MSMEs contributes approximately 30% of Gross Domestic Product (GDP), over 45% of total exports and gives employment to more than 26 crore people. Global Value Chains (GVCs) where production is broken into specialised stages across countries. GVCs provides MSMEs a path towards international trade. Yet India’s GVC participation stays well below East Asian and South-East Asian peers. This paper examines what Indian MSMEs stand to gain from GVC integration, what holds them back, and whether recent government schemes like the Production Linked Incentive (PLI), Udyam Registration, the Government e-Marketplace (GeM) and the Trade Receivables Discounting System (TReDS) are delivering results. Drawing on secondary data from the Ministry of MSME, the Press Information Bureau (PIB), the Organisation for Economic Co-operation and Development’s (OECD) Trade in Value Added (TiVA) database, the Small Industries Development Bank of India (SIDBI), and the Directorate General of Commercial Intelligence and Statistics (DGCIS), the paper argues that while India’s policy framework has improved since the pandemic, structural problems around credit access, outdated technology, high logistics costs, and widespread informality continue to block most MSMEs from global production networks.