India's MSME Sector Exports Less Despite High Business Setup Costs

India is home to approximately 64 million micro, small, and medium enterprises, making it one of the largest MSME bases in the world. However, only a very small proportion of these businesses participate in export activity. This is notable given that the MSME sector collectively accounts for nearly 45 percent of India's total exports. Higher costs of starting and running a business in India compared to competitors like China and Vietnam are seen as a key barrier limiting the sector's global competitiveness. Addressing these structural cost disadvantages could unlock significantly greater export potential from Indian MSMEs.
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