Swadeshi needs MSME muscle

When Prime Minister Narendra Modi asked Indians to look closely at their everyday purchases and ask whether they were made in India or abroad, he struck a chord that is both symbolic and urgent. His reminder—“Say it with pride, I buy swadeshi”—was less about combs and kitchenware, more about a national economic anxiety: how can India insulate itself in a world of tariff wars, disrupted supply chains, and protectionist politics?

The larger truth is that a swadeshi movement for the twenty-first century cannot rest on consumer sentiment alone. Pride matters, but without competitive domestic industries, the call to buy Indian will ring hollow. And here lies the crux: India’s ability to translate Modi’s rhetoric into reality depends above all on the vitality of its micro, small, and medium enterprises—the MSMEs that form the backbone of Indian manufacturing.

India has more than 63 million MSMEs, accounting for roughly a third of GDP and nearly half of exports. They employ over 110 million people, second only to agriculture in terms of livelihood creation. For decades, they have stitched garments, forged auto parts, processed food, and crafted countless goods that fuel both domestic markets and foreign trade. Modi is right to call them “contributors to the economy during India’s golden years.” Yet today, these very enterprises are in crisis.

The challenges are familiar but severe. Many MSMEs struggle with access to affordable credit, relying on informal loans at exorbitant rates. Payments are often delayed by larger buyers, including government departments themselves, squeezing already thin margins. Technology adoption lags; only a fraction of units have access to modern machinery, digital tools, or global quality certifications. Infrastructure deficits—from erratic electricity to poor logistics—raise costs and reduce competitiveness. And as global markets become more exacting, Indian MSMEs risk being trapped in low-value production, unable to climb the ladder of innovation and branding.

This gap between rhetoric and reality is why the swadeshi message must be paired with systemic reforms. To begin with, credit flow to MSMEs must be reimagined. While schemes like the Credit Guarantee Fund and priority sector lending exist, banks remain risk-averse, particularly after the pandemic shocks. Newer models—cash-flow based lending, digital credit, and fintech platforms—must be scaled rapidly, ensuring that viable small firms are not throttled by lack of working capital.

Second, technology upgradation cannot remain a slogan. Many MSMEs still operate in workshops that look little different from those of the 1980s. Programs to subsidize modern machinery, provide access to industrial parks with plug-and-play infrastructure, and link firms to research institutions are critical. Without this, “Make in India” risks being reduced to “assemble in India.”

Third, the issue of quality must be tackled head-on. For consumers to choose swadeshi voluntarily, Indian products must compete not just on patriotism but on reliability, design, and value for money. That requires stronger certification regimes, mentoring for smaller units, and greater exposure to international standards. Modi’s challenge to MSMEs to “manufacture high-quality products enabling customers to make the switch to swadeshi” is impossible without hand-holding from the state.

Fourth, the role of state governments is pivotal. Cooperative federalism cannot be an afterthought if Atmanirbhar Bharat is to succeed. States control industrial land, power supply, local taxes, and much of the infrastructure pipeline. They must create clusters tailored to local strengths—be it textiles in Tamil Nadu, auto components in Maharashtra, or food processing in Uttar Pradesh. A national swadeshi campaign will fail if its benefits are unevenly distributed or bottlenecked by state-level inertia.

There is also the matter of global context. Modi’s speech came against the backdrop of U.S. tariff hikes and a steep rise in H-1B visa costs. Washington announced tariffs of up to 50 percent on most Indian imports effective August 27, 2025, and followed with a USD 100,000 fee on new H-1B applications—a measure clarified to begin in 2026 and to apply only to fresh petitions, not renewals. These moves underline a hard truth: in an era of economic nationalism, countries will prioritize their own workers and industries. India cannot afford to remain dependent on volatile external conditions. Yet self-reliance cannot mean isolation. Modern swadeshi must combine domestic strength with global integration—using trade deals, technology partnerships, and investment flows to build scale and competitiveness at home. The challenge is to avoid both extremes: blind protectionism that insulates inefficiency, and blind globalization that erodes local capacity.

Consumers, too, play a role. Modi’s comb metaphor matters because it underscores the invisibility of global dependence in daily life. Indians often buy what is cheapest or most visible, rarely asking where it came from. Awareness campaigns can nudge consumers toward Indian goods, but the real driver will always be value. No middle-class family will pay 20 percent more for an inferior product just because it is swadeshi. Which is why the burden lies not on patriotic sentiment but on productive efficiency.

GST reforms, which Modi described as a “double bonanza,” are relevant here. By simplifying rates and reducing compliance burdens, they can lower costs for consumers while enabling small firms to compete more fairly. Yet GST relief is only one piece of a larger puzzle. The bigger prize lies in building robust supply chains—from raw material procurement to logistics to export facilitation—that make Indian products naturally competitive.

It is also worth remembering that swadeshi was never only about economics. In the freedom movement, it was about reclaiming dignity, asserting identity, and resisting domination. In today’s world, its revival carries a similar undertone: the desire to control one’s own destiny rather than be at the mercy of foreign powers. 

But symbolism must be backed by substance. To make swadeshi more than a slogan, the government must show that MSMEs are not just expected to deliver but are actively supported to thrive.

The path forward is not easy. India still imports the bulk of its electronics, with imports crossing USD 100 billion in FY25 against about USD 41 billion exported. Building domestic capacity in such sectors will take years, even decades. But the starting point must be MSMEs: equipping them with credit, technology, infrastructure, and markets so that they can form the bedrock of a resilient manufacturing ecosystem.  If that ecosystem is strong, swadeshi will not require constant exhortation; it will simply be the natural choice.