NITI Aayog published a report aimed at enhancing the competitiveness of Micro, Small, and Medium Enterprises (MSMEs) in India

Concerning the Report

– It was developed by NITI Aayog in partnership with the Institute for Competitiveness (IFC).

– The goal is to unleash the capabilities of India’s MSMEs via structural changes in funding, training, innovation, and market entry.

– It underscores difficulties in funding, training, innovation, and market entry in critical areas such as textiles, chemicals, automotive, and food processing.

India's small and medium-sized enterprises sector

It serves as a crucial catalyst for India's industrial economy, featuring 5.93 crore registered businesses that provide jobs to more than 25 crore individuals.

In the 2023-24 period, products related to MSMEs accounted for 45.73% of India's overall exports.

In the past few years, the MSME sector has shown impressive resilience, raising its contribution to the country's Gross Value Added (GVA) from 27.3% in 2020-21 to 29.6% in 2021-22 and 30.1% in 2022-23, underscoring its expanding significance in national economic output.

The Union Budget 2025-26 comprises initiatives to bolster the MSME sector, featuring improved credit availability, assistance for new entrepreneurs, and encouragement for labour-intensive industries.

The criteria for classifying MSMEs have been updated, raising the investment and turnover thresholds by 2.5 times and 2 times, accordingly. This is anticipated to enhance efficiency, technology adoption, and job creation.

Issues Emphasized in Recent Report

Despite improvements in MSME access to formal credit from 2020 to 2024 (micro and small businesses rising from 14% to 20%, medium enterprises increasing from 4% to 9%), 81% of the credit demand from MSMEs still goes unmet, resulting in an estimated gap of ₹80 lakh crore.

The Credit Guarantee Fund (CGTMSE) has grown, yet it continues to encounter challenges. Numerous MSME employees do not possess formal vocational or technical training, which restricts productivity and growth potential.

A considerable number of MSMEs also invests insufficiently in research and development, quality enhancement, and innovation.

MSMEs encounter difficulties in embracing modern technologies because of inconsistent electricity, poor internet connectivity, and elevated implementation expenses. State government initiatives promoting technological progress are frequently unreachable due to limited awareness.

Despite numerous MSME support initiatives, their impact is restricted due to low awareness and inadequate execution.

Recommendations and Next Steps

India’s MSMEs can drive sustainable economic growth by concentrating on specific interventions, strengthening institutional partnerships, and improving global competitiveness.

The report advocates for improved assistance for MSMEs via digital marketing education, collaborations with logistics firms, and the establishment of platforms for direct market connections, particularly in high-growth areas like India’s northeastern and eastern regions.