Uttar Pradesh to Play Big Role to Make India 3rd Largest Economy by 2030

🔍Insights

Sayantan Mondal, Apoorva Bajj

Oct 2, 2023 — 5 min read

Uttar Pradesh to Play Big Role to Make India 3rd Largest Economy by 2030

Uttar Pradesh with an aim of becoming a $1 trillion economy is currently the fastest growing state-economy in the country. Investors in Uttar Pradesh are bridging credit gaps in the thriving MSME sector. The state will play a big role in making India the third-largest economy in the world.

Uttar Pradesh is leading the growth of the Indian MSME sector with the highest number of MSMEs in India. The largest and most populous state boasts more than 96 lakh MSMEs, making the state one of the fastest-growing state-level economies in the country.

President Draupadi Murmu, in her address at the inauguration of the first UP International Trade Show, stated that over 200 manufacturers from the state were displaying their products to more than 400 buyers from a total of 66 countries. The event provided a platform for local manufacturers and small businesses to showcase their products in the national and international markets.

The President also mentioned that Uttar Pradesh, despite being a landlocked state, has experienced remarkable growth in exports, with the value increasing from around Rs 88,000 crore in 2017-18 to Rs 1,75,000 crore in 2022-23. She attributed this growth to the proactive steps taken by the state government to promote economic growth and attract investments.

“Uttar Pradesh is now among the fastest growing state-level economies in the country due to simplification of the investment process, ease of doing business and acceleration in infrastructure development,” said Murmu.

In the same event, Union Minister Narayan Rane stated that India is expected to become the third largest economy by 2030 and UP is going to play a major role in it. He also emphasized the necessity of enhancing citizens' per capita income to address migration, underscoring the state's goal of reaching a $1 trillion economy. He also highlighted the per capita income disparities between the United States and India to underscore the importance of economic growth in improving people's quality of life. Using the instance of industrialization in his home state of Maharashtra, Rane pointed out that comprehensive research and analysis are vital to determine the suitable industries and their optimal locations within various areas or districts.

Key Sectors for Investment in Uttar Pradesh
Advice to MSMEs Attracting Investment in Uttar Pradesh

Key Sectors for Investment in Uttar Pradesh

Mr. Amit Tyagi, CEO, PayWorld highlighted key sectors that offer the most investment in Uttar Pradesh:

Financial Inclusion: Uttar Pradesh, a populous state with a significant number of underserved population segments, is poised for improved financial inclusion. Fintech companies have a crucial role to play in achieving this by providing innovative and affordable financial products and services tailored to these segments.
Agriculture: As a major agricultural hub in India, Uttar Pradesh offers substantial opportunities for fintech companies to revolutionize the agricultural sector. Fintech solutions, including crop insurance, agricultural financing, and supply chain management, can greatly benefit farmers and other stakeholders.
Small Businesses: Uttar Pradesh is home to a multitude of small businesses, presenting fintech companies with the opportunity to offer a range of services. These services encompass digital payments, accounting software, and access to business loans, supporting the growth and success of these enterprises.

The Uttar Pradesh government is actively promoting digital payments and fintech solutions, leading to an increasing demand for these services. Fintech companies can address this demand by providing solutions for government-to-citizen payments, tax processing, and subsidy distribution.

Nevertheless, Indian MSMEs have faced a significant challenge in the form of limited access to credit within the market. To address this issue, both government agencies and non-governmental funding institutions throughout the country have made concerted efforts to facilitate easier access to capital.

Mr Ameet Venkeshwar, CBO, LoanTap Financial Technologies, said that bridging the credit gap for MSMEs requires a combination of innovative products, customer-centric solutions, and collaboration between various financial institutions and businesses. Other than providing MSMEs loans, he said, “We have our own product called AfterPay Merchant by LoanTap, a dedicated credit solution for MSMEs tailored to accelerate business growth.”

“We partner with large retailers to assist MSMEs, particularly small retail stores, in gaining easy access to funds through a revolving credit line. This support allows them to benefit from extended payment terms, bolstered working capital, and ensures a stable supply. Mostly the small retailers and Kirana stores are often underserved and this allows us to serve them moving more towards our vision of financial inclusion,” Mr Venkeshwar added.

Mr Tyagi of PayWorld emphasized, “Our extensive network of merchant points provides MSMEs access to digital financial services, empowering them with digital payments, bank accounts, and e-wallets. Collaborations with financial institutions enable us to offer tailored micro-loans, addressing capital needs for UP's MSMEs.”

He stated that they are committed to innovation and the development of digital platforms. He mentioned that tailored products and financial awareness campaigns played a significant role in enhancing their commitment to UP's economic growth. In a landscape where MSMEs sought credit solutions, Mr. Tyagi believed that PayWorld's extensive reach and unwavering dedication to digital financial services could be transformative, propelling MSMEs toward prosperity and contributing significantly to the state's development.

Advice to MSMEs Attracting Investment in Uttar Pradesh

Uttar Pradesh boasts a vibrant and flourishing MSME sector, which serves as the cornerstone of the state's economy. These small and medium-sized enterprises contribute significantly to its GDP and generate millions of jobs. For MSMEs in Uttar Pradesh looking to invest in their growth, several key opportunities exist.

Government Initiatives: To support MSMEs in the state, the state government has initiated various programs, including the One District One Product (ODOP) scheme and the Nivesh Mitra portal. These schemes offer financial and technical assistance to MSMEs, streamlining the process of raising investments and saving both time and money.
PM Vishwakarma Yojana Scheme: The Pradhan Mantri Vishwakarma Kaushal Samman Yojana, a central government initiative, provides skill training to traditional artisans and craftsmen. MSMEs in Uttar Pradesh can leverage this scheme to train their employees, enhancing productivity and making their businesses more appealing to potential investors.
Targeting the Export Market: The export market presents numerous opportunities for the state’s MSMEs, with the government actively promoting exports from the state. By tapping into government support and the growing export sector, MSMEs in UP can expand their operations and attract increased investment.
Leveraging Fintech: Uttar Pradesh’s MSMEs can harness fintech solutions to attract investment and facilitate business growth. They can utilize online crowdfunding platforms to raise capital from a wide investor base. Furthermore, fintech platforms can automate accounting and financial reporting processes, enhancing their appeal to potential investors. Collaborating with fintech companies to develop innovative financial products and services is another avenue through which MSMEs in UP can pique investor interest.

Mr. Venkeshwar also acknowledged that attracting investment can pose a challenge, but it is an attainable goal when the right strategy and approach are in place. Furthermore, with the sector's growth on the rise, the outlook appears promising, particularly with new initiatives such as financial inclusion aimed at assisting the underserved sector in India.

Union Minister Narayan Rane also mentioned that there are approximately 9.5 million MSMEs in the state, and when considering the entire country, there are around 63 million functional MSMEs. He stated that through the MSME sector in Uttar Pradesh, small businessmen and farmers have been finding employment opportunities, and they have been significant contributors to India's growing economy.