Corporate Insolvency And Recovery Mechanisms For Small And Medium Enterprises (MSMEs) In India

Yahvi Jain

ABSTRACT

Micro, small, and medium companies (MSMEs) provide many benefits to the Indian economy such as employment, output, economic expansion, entrepreneurship, and GDP growth. But since they have trouble getting funding, drawing in and keeping skilled workers, and breaking into local, national, and global markets, MSMEs are especially susceptible to financial shocks. The second wave of COVID-19 was unexpected, and MSMEs were ill-prepared for it.1

An economy in good health depends on the MSME sector, which industrializes rural and underdeveloped areas, reduces regional imbalances, and guarantees a more equal distribution of national income and wealth. Moreover, they provide large employment opportunities at comparatively lower capital costs than large industries. Among the many measures by which the MSME sector has risen significantly in the last ten years are the number of units, production, employment, and exports. This industry can offer much more and realize its enormous potential with the appropriate support structures and enabling environment.2.

Henceforth, the MSME is essential for India's economic growth and development. However, it faces challenges in accessing finance, attracting, and retaining qualified workforce, and penetrating regional, national, and international markets. With the right support systems and enabling framework, MSMEs can contribute significantly to the overall growth of the Indian economy.3 Technological backwardness is one of the most important constraints faced by these businesses4.