In a bid to ensure better credit facility, market access and qualitative infrastructure, the industry bodies representing the micro, small and medium enterprises (MSME) sector have urged the Odisha government to increase budgetary allocation for the segment, ahead of Budget 2026-27, which will be presented in the Odisha Assembly on February 20.
Higher funding is essential to strengthen the MSME ecosystem, especially in rural, tribal and backward districts, where small businesses play a key role in employment generation, the entrepreneurs representing the industry bodies argued.
It is noteworthy that in 2025-26 Budget, the allocation for the MSME sector stood at a little over ₹1,500 crore. They called on the government to increase the outlay with a focus on credit facilities, skill development, infrastructure and market linkages.
Small Scale industries, it may be noted, are businesses with limited capital investment and workforce. Often classified under Micro, Small & Medium Enterprises (MSME), they play an important role in employment generation and are vital to rural development. Most importantly, they add value locally. In Odisha, traditional crafts, food processing units, handloom, and light manufacturing sectors, come under small-scale industries.
In a mineral-rich state like Odisha, the growth story of the state is often focused on heavy industries such as aluminium and steel, iron, coal, etc., along with its mining potential. However, if official records are to go by, it can be found that small-scale industries and MSMEs are the backbone of inclusive growth not just numerically, but in terms of employment, regional balance, and resilience.
According to Economic Survey of Odisha 2025, as of January 2025, the total number of MSMEs stands at 18.7 lakh. These units are not just marginal players; they reinforce the industrial fabric of the state, providing employment, which is only next to agriculture.
To be precise, MSMEs make up an estimated 90% of all industrial establishments in Odisha, underscoring their role as the backbone of industrial diversity. They contribute around 20–25% of Odisha’s Gross State Domestic Product (GSDP). Here’s how:
Create employment
Over the years, MSMEs have created job opportunities for people, especially outside the agricultural sector. Official records show that they employ around 4.5 million, which is nearly 30% of the total state’s workforce. This has not only benefited the youth but has also reduced urban-rural migration, allowing youth to play a significant role in local economic stake. In other words, they create distributed economic growth, not concentrated wealth, meaning the benefits of economic development are spread across many people, regions, and sectors, instead of being accumulated in the hands of a few corporations, cities, or individuals.
Similarly, it has provided opportunities for artisans, weavers, small manufacturing units like tobacco, food processing sectors to operate as a unit and earn money, which in turn also generates revenue for the state. The small manufacturers in urban areas also integrate into larger supply chains.
Contribute to exports
MSMEs also play a key role in Odisha’s export growth. According to official data, they contribute about 18% of the state’s exports, which includes sectors like textiles, processed food, and marine products. For example, in 2024-25, Odisha exported seafood worth Rs 4,700 crore, with around one-third to the US market alone. Similarly, textile and apparel exports accounted for Rs 85.5 crore in 2023-24.
Official record suggests that Odisha’s seafood export sector has grown from Rs 360 crore in 2004-05 to more than Rs 4,700 crore in 2024-25. It is one of the top five foreign exchange earners and the largest employer in the agri-allied sector, with over 50% women employees.
Act as a buffer against economic disruption
One of the major contributions of the MSMEs that usually go unnoticed or get subverted by major industries is that they are a great support system to the economy offering resilience during volatile situations. For example, during Covid-19, the pandemic times, when large industries slowed, small-scale industries played a critical stabilising role. Amid chaos, when supply chains were disrupted, small scale industries continued to contribute to the economy. Food processing units continued operations as essential services (rice mills, spice processing, edible oil units, handloom and textile units shifted to mask production and protective clothing, while rural micro-enterprises absorbed returning workers through small manufacturing and agro-processing activities.
However, despite playing a significant role in the economy, this sector faces various challenges. Case in point is a 2023 report by ASSOCHAM. It highlighted that more than 65% of MSMEs in Odisha face difficulties in accessing institutional credit due to the high perceived risk by lenders.
The post-pandemic period has also exposed the fragility of many of these enterprises. According to a report released by the Federation of Indian Chambers of Commerce and Industry (FICCI) in 2023, over 70% of MSMEs in Odisha reported disruptions in production and sales between 2020 and 2022, pushing many to the brink of closure.
The informal nature of many MSMEs aggravates their vulnerability, making them less resilient to economic shocks and policy shifts.
To address these concerns, the Government of Odisha has launched a set of policy initiatives under Vikshit Odisha in tandem with the national roadmap for Viksit Bharat 2047, a vision to make India a developed economy by the centenary of its independence.
One of the key initiatives of Viksit Odisha model is the MSME Development Policy 2022, which provides capital investment subsidies, market facilitation, cluster development, digitization of services, and skill training for entrepreneurs (Invest Odisha, 2022). Additionally, schemes such as the Odisha Startup Policy, the Food Processing Policy, and infrastructure plans for MSME parks aim to create an enabling ecosystem for enterprise growth.
Having said that it requires proper execution along with monitoring to make it successful because when crises hit, the state’s MSMEs comes to the rescue by keeping livelihoods intact and local economies moving.
Also Read: Indo-US trade deal: How will it impact Odisha’s economy
