Karnataka's micro, small and medium enterprises are emerging as a central pillar of the state's employment economy, with five million (mn) registered MSMEs employing 23 mn people, Chief Secretary Shalini Rajneesh said at the India Family Business Summit in Bengaluru. The sector contributes eight point three per cent of the state's gross state domestic product and accounts for about 45 per cent of manufacturing output and 40 per cent of exports, signalling a role beyond job creation.

Rajneesh released a survey report titled Karnataka's Next Wave of Growth – Unleashing the Potential of SMEs, which found that a majority of entrepreneurs surveyed across the industrial and services sectors were satisfied with state government policies and programmes. The report highlighted that while policy reception is positive, talent availability and awareness of government schemes remain areas requiring greater attention and more targeted outreach.

For family-run enterprises the next phase of growth is expected to involve adapting to changing global supply chains, improving access to finance and technology and responding to evolving customer expectations, Rajneesh said, noting that succession should involve not just transferring ownership but also passing on knowledge, values and responsibility. The state government is focusing on ease of doing business, infrastructure improvements and workforce development measures to better connect local SMEs with global value chains and to strengthen industrial linkages.

Women entrepreneurship was emphasised as a key growth area, with government-backed financial support and collateral-free lending mechanisms positioned as avenues for expanding participation in small businesses and widening the entrepreneurial base. Given their sizeable employment footprint, Karnataka's MSMEs are likely to remain central to the state's capacity to create jobs beyond the established technology and services ecosystem and to sustain more balanced regional economic development.