Private labels offer Indian MSMEs an export pathway
Small and Medium Enterprises (MSMEs) to global value chains, as highlighted at G20 meetings and through our Foreign Trade Policy, 2023, is undeniably a step in the right direction. The MSME sector is one of our largest employers, accounting for 29.2% of GDP and 36.2% of manufacturing output in 2021-22. However, the share of MSMEs in our exports has declined from 49.4% in 2020-21 to 43.6% in 2022-23.
While the Indian economy is on a fast-growth trajectory, considering the global economic outlook, MSME exports are going through a tough time. In this uncertain global scenario, the role of MSMEs as drivers of India’s growth and employment cannot be undermined. To enhance their output, enable exports and bolster their overall contribution to India’s economy, multiple steps can be taken.
For example, while many MSMEs operate as contract manufacturers at present, sourcing by private labels from India has space for growth. India is under-represented globally and such exports can be increased through policy support. A private label product is one that a retailer or e-commerce company can get manufactured by a third party (usually an MSME) to sell under its own store brand name.
The private label market in India is on the rise, driven by the emergence of organized retail formats, both physical stores and online platforms. This growth is fuelled by consumer preferences for distinctive, high-quality products at affordable prices. With the rise in disposable incomes and consumer aspirations, users of unbranded products are shifting to branded versions.
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