Policy miss: 71% of small manufacturers say government skill schemes haven't helped - Report

A majority of small manufacturing enterprises in India say government-run skill-training initiatives are failing to reach them effectively, with 71 per cent reporting no benefits from such programmes, according to a report by Cushman & Wakefield.

The survey, part of the firm’s report ‘Elevating India's Manufacturing Resilience: Charting the Path to Self-Reliance’, highlights major gaps in talent support to Micro, Small and Medium Enterprises (MSMEs).

According to news agency ANI, around 61 per cent of MSMEs overall said they had not received any support from government skill and talent programmes, while just 39 per cent confirmed any benefit.

The disconnect is sharpest among smaller firms, those employing fewer than 500 people.

The report notes that MSMEs employ four out of every five workers in the manufacturing sector and contribute to 40 per cent of the output. Yet, productivity remains low. A worker in an MSME generates only 14 per cent of the output compared to one in a large enterprise.

Comparable firms in other emerging economies are already nearing 30 per cent output per worker, while the gap is even narrower in developed nations.

Cushman & Wakefield’s executive managing director Gautam Saraf said bridging capacity and cost gaps in areas like logistics, integrated facilities, and MSME productivity is vital.

“Plug-and-play industrial parks, multimodal logistics networks, and improved land aggregation frameworks are not just enablers—they are essential levers for converting policy momentum into production-ready outcomes,” he said, as quoted by ANI.

Interestingly, while skill initiatives lag, infrastructure spending is having a strong impact. About 88 per cent of respondents said projects like Bharatmala, Sagarmala, Dedicated Freight Corridors, and the National Industrial Corridor Development had influenced their capital expenditure plans.

In fact, 93 per cent reported better operating efficiency and profitability where modern industrial parks and corridors are present, and 94 per cent of large enterprises credited infrastructure upgrades as key to their growth.

However, long-term competitiveness is still threatened by high logistics costs, limited warehousing (0.2 sq. ft. per urban resident in India compared to 47.3 sq. ft. in the US), low domestic value addition (17 per cent vs China’s 25 per cent), and skill shortages, especially in MSMEs.

These challenges compound existing regulatory burdens. In a separate study by TeamLease RegTech, a typical manufacturing MSME deals with over 1,450 compliance obligations annually, costing Rs 13–17 lakh per year. These span seven legal categories and involve 486 imprisonment clauses, many for procedural lapses.

Rishi Agrawal, CEO of TeamLease RegTech, stressed that India must urgently reduce its “deeply entrenched hostility and inspector raj” to unshackle MSME growth. “We need to add compliance to India’s DPI (Digital Public Infrastructure) stack,” he added, as cited by ANI.

The latest findings reinforce calls for a more holistic and MSME-centric policy approach—one that combines skill development with regulatory relief and infrastructure support to truly empower India’s 6.45 crore MSMEs.

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