NITI Aayog released a comprehensive report titled “Achieving Efficiencies in MSME Sector through Convergence of Schemes”, laying out a strategic roadmap to improve the effectiveness, reach and impact of government support to India’s Micro, Small and Medium Enterprises (MSMEs).
“Achieving Efficiencies in MSME Sector through Convergence of Schemes” Report
The report provides a detailed blueprint to improve outcomes for MSMEs by:
- Streamlining scheme implementation
- Strengthening inter-ministerial and Centre–State coordination
- Enhancing delivery of finance, skills, marketing, technology and innovation support
It evaluates existing Government of India schemes for MSMEs, assesses the current level of convergence, identifies overlaps and gaps, and draws on best practices from central ministries, states and international experiences. Based on this, it offers actionable recommendations to unlock convergence opportunities and improve efficiency, outreach and impact.
Why convergence of MSME schemes is needed
- The Ministry of MSME administers 18 schemes covering:
- Credit assistance
- Skill development
- Marketing support
- Innovation and R&D
- Technology & quality upgradation
- Infrastructure development
- While these schemes have supported MSME growth, the report highlights key problems:
- Overlapping objectives across schemes and ministries
- Fragmented implementation mechanisms
- Duplication of efforts and resources
- Confusion and limited outreach for beneficiaries
- The report stresses that effective convergence and rationalisation can:
- Simplify access for MSMEs
- Improve translation of spending into outcomes
- Reduce administrative duplication
- Amplify overall impact of public expenditure
Framework for convergence recommended by NITI Aayog
The report proposes a two-pronged convergence framework:
1. Information convergence
- Integration of government-generated data at central and state levels
- Improved coordination and evidence-based policymaking
- Stronger governance and monitoring outcomes
2. Process convergence
- Alignment and unification of schemes with similar objectives
- Merging common components and reducing redundancies
- Collaboration across ministries and states
- Creation of a cohesive MSME support ecosystem
Key recommendations of report
1. AI-powered centralized MSME portal
- Creation of a single digital platform integrating:
- MSME schemes
- Compliance requirements
- Finance and credit access
- Market intelligence
- Features proposed:
- Information, process, compliance and market research modules
- AI chatbots, dashboards and mobile access
- Real-time decision support for MSMEs
2. Convergence of cluster development schemes
- Integration of:
- SFURTI (Scheme of Fund for Regeneration of Traditional Industries)
- MSE–Cluster Development Programme (MSE-CDP)
- Key proposals:
- Dedicated sub-scheme for traditional industries
- Unified governance under MSE-CDP
- Consolidated funding with earmarked resources
- Protection of crafts, arts and endangered traditional industries while improving scale and efficiency
3. Convergence of skill development programmes
- Rationalisation into a three-tier skill structure:
- Entrepreneurship and business skills
- MSME technical skills
- Training for rural and women artisans
- Benefits:
- Merging overlapping initiatives
- Better coordination among institutions
- Retention of targeted programmes for inclusion, crafts and entrepreneurship
4. Dedicated MSME Marketing Assistance Wing
- Proposal for a Marketing Wing with two components:
- Domestic wing: National exhibitions, trade fairs, buyer–seller meets
- International wing: Overseas trade fairs, B2B events, global buyer–seller meets
- Objective: Streamline marketing support and improve market access for MSMEs
5. Integration of ASPIRE with MSME Innovative
- ASPIRE (A Scheme for Promoting Innovation, Rural Industry & Entrepreneurship) to be integrated into MSME Innovative as a special category for agro-rural enterprises
- Existing ASPIRE funds to continue
- Future MSME Innovative budgets to earmark funds for agro-rural incubators
- Expands access to advanced incubation without excluding rural enterprises
Schemes recommended to remain independent
The report cautions against blanket mergers and recommends cautious convergence. It specifically suggests retaining the independence of:
- PMEGP (Prime Minister’s Employment Generation Programme)
- PM Vishwakarma
- Targeted initiatives like:
- National SC/ST Hub
- Promotion of MSMEs in the North Eastern Region (NER)
These are considered large, flagship or region-specific schemes with strategic importance.
Implementation approach suggested
- Merge schemes only where objectives clearly overlap
- Preserve the distinct focus of targeted programmes
- Where full merger is not feasible:
- Use joint workshops
- Shared capacity-building for administrators
- Emphasis on:
- Protecting beneficiary interests
- Managing transitions carefully
- Rigorous outcome tracking
What are MSMEs?
Definition
MSMEs are enterprises classified based on investment in plant and machinery/equipment and annual turnover, as per the MSMED Act, 2006.
Economic significance
- Contribution to GDP: 27–30%
- Employment: ~62% of workforce (≈28.13 crore people)
- Share in exports: ~45%
Government spending
- ₹6,717 crore (2019–20) → ₹22,094 crore (2023–24)
Formalisation status
- Over 90% MSMEs still informal
- Tools for formalisation:
- Udyam Registration Portal (self-registration)
- Udyam Assist Platform (UAP) for Informal Micro Enterprises
- Registrations:
- 3.94 crore MSMEs on Udyam Portal
- 2.71 crore IMEs on Udyam Assist Platform
Sectoral and regional spread (Oct 2024)
- Manufacturing: 25%
- Services: 75%
- Rural: 51% | Urban: 49%
Revised MSME classification (effective 1 April 2025)
- Micro:
- Investment ≤ ₹2.5 crore | Turnover ≤ ₹10 crore
- Small:
- Investment ≤ ₹25 crore | Turnover ≤ ₹100 crore
- Medium:
- Investment ≤ ₹125 crore | Turnover ≤ ₹500 crore
Overall significance of NITI Aayog report
- Shifts focus from scheme proliferation to scheme effectiveness
- Emphasises coordination, data integration and process simplification
- Supports MSMEs through:
- Easier access
- Better targeting of resources
- Higher return on public spending