Daily Mains Question – GS 3 – 11th July 2025

Welcome to your daily Mains Model Answer — designed to strengthen your grasp over Inclusive Economic Growth and Employment Generation, both core components of GS Paper 3. Today’s answer critically examines the challenges faced by women entrepreneurs within India’s MSME sector and explores how policy design can shift from fragmented support to holistic ecosystem building.

This topic intersects key developmental themes such as gender-equitable growth, grassroots entrepreneurship, financial inclusion, and the role of micro-enterprises in driving regional development. It also aligns with India’s broader goals of demographic dividend realisation, rural industrialisation, and balanced labour force participation.

By analysing data from recent surveys and economic reports, this model answer unpacks structural, financial, and social constraints that hinder the growth of women-led MSMEs. Aspirants will gain nuanced insights into how integrated policy ecosystems — involving credit, capacity building, digital access, and market linkages — can catalyse women’s entrepreneurial potential. The response blends factual detail with conceptual clarity, helping candidates articulate practical, inclusive strategies in the UPSC Mains examination.

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QUESTION

Examine the problems that women entrepreneurs confront in India’s MSME sector. How might policies be tailored to provide comprehensive support rather than piecemeal assistance?

Answer: Women-led Micro, Small and Medium Enterprises (WMSMEs) are not merely instruments of gender inclusion but powerful drivers of economic decentralisation, job creation, and local development. As per the Economic Survey 2024–25, women account for only 22% of all MSMEs in India, and most of these are micro-enterprises, operating with limited scale, primarily in traditional sectors like tailoring, food processing, handicrafts, and agro-based industries. Despite constituting nearly half the population, the representation of women in entrepreneurship remains disproportionately low.

I. Challenges Faced by Women Entrepreneurs in the MSME Sector:

1. Limited Access to Formal Finance

   • Less than 10% of women entrepreneurs access formal credit.

   • Reliance on personal savings or informal lending mechanisms continues.

   • Absence of collateral, credit history, or formal records restricts access to institutional finance.

2. Sectoral Concentration in Low-Margin Industries

   • High involvement in sectors like food processing, tailoring, handicrafts, which are:

     • Informal

     • Low capital

     • Low return

     • Vulnerable to economic shocks

3. Regulatory and Documentation Barriers

   • Complex compliance norms and documentation requirements, often misaligned with how women-led micro businesses operate.

   • Limited digital literacy and low exposure to formal systems aggravate the issue.

4. Market Access Constraints

   • Limited visibility beyond local markets due to inadequate logistics and marketing channels.

   • Low participation in e-commerce and formal retail supply chains.

5. Gendered Societal Norms and Time Poverty

   • Women entrepreneurs often balance business with domestic responsibilities, leading to reduced operational capacity.

   • Social mobility restrictions in some regions limit networking and exposure.

6. Lack of Tailored Capacity Building

   • Entrepreneurship programs such as PMEGP, RSETI, and PM Vishwakarma are largely gender-neutral and input-centric, lacking contextual relevance for women.

7. Informality and Scale Constraints

   • A majority of WMSMEs operate informally without business registration, structured governance, or plans for scale.

   • This limits access to government schemes and public procurement opportunities.

     
     

II. The Economic and Social Case for Supporting WMSMEs:

1. Macro-Economic Impact

   • MSMEs contribute nearly 30% of India’s GDP and employ over 20 crore people.

   • Increasing female entrepreneurship can significantly raise India’s GDP by several percentage points, according to McKinsey Global Institute estimates.

2. Social Multiplier Effect

   • Studies show women reinvest up to 90% of their income into family well-being, compared to 30–40% by men.

   • This improves health, education, and nutrition indicators.

3. Employment Multiplier

   • WMSMEs tend to employ more women, especially in rural and semi-urban areas, reducing gender disparity in the labour market.

4. Localized Economic Resilience

   • Many women-led enterprises operate in underserved regions, addressing local needs and promoting rural industrialisation.

     
     

III. Policy Measures for Holistic Support:

To move beyond fragmented interventions, policy design must transition to ecosystem-based support:

1. Integrated Support Ecosystems

   • Create district-level Women Business Support Centres offering a single-window for training, credit access, market linkages, and mentorship.

2. Gender-Responsive Credit Framework

   • Promote collateral-free loans under credit guarantee schemes tailored for women.

   • Expand women-centric financial platforms like Mann Deshi and Rang De, which combine lending with coaching.

3. Formalisation and Digital Enablement

   • Encourage registration on Udyam portal and onboarding to ONDC (Open Network for Digital Commerce) to improve visibility and market access.

   • Train women entrepreneurs in digital marketing, e-payments, GST compliance, and cybersecurity.

4. Cluster Development and SHG-Enterprise Integration

   • Leverage existing Self-Help Group (SHG) networks and integrate them into MSME cluster programs, with collective branding, procurement, and infrastructure support.

5. Gender-Mainstreamed Scheme Design

   • Programs like PMEGP, SFURTI, RAMP, etc., must include women-specific components, outcome tracking, and grievance redressal.

   • Include flexible working capital, business counselling, and family support features like crèche facilities.

6. Public Procurement and Incubation Support

   • Mandate a sub-quota for women-led MSMEs in Government e-Marketplace (GeM) procurement.

   • Provide priority incubation access for women in Startup India and MSME Incubators.

7. CSR and Impact Investment

   • Encourage Corporate Social Responsibility (CSR) funds and impact investors to seed early-stage women enterprises in high-risk sectors.

     
     

India’s demographic dividend cannot be realised without unlocking the full economic potential of its women. WMSMEs are central to bridging the urban-rural divide, creating resilient livelihoods, and fostering inclusive growth. As digital platforms like ONDC and SHG-based collective enterprises mature, they offer scalable models of empowerment.

Rather than piecemeal inputs, India requires comprehensive, gender-responsive ecosystems that support finance, formalisation, market access, and social capital for women entrepreneurs. Strengthening WMSMEs is not just a gender equity issue — it is a strategic economic imperative for a future-ready India.

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