Report Titled, “Enhancing MSMEs Competitiveness in India”, was prepared by: NITI Aayog in collaboration with Institute for Competitiveness (IFC). The report provides a blueprint to unlock the potential of India’s Micro, Small and Medium Enterprises (MSMEs) through reforms in financing, skilling, innovation, and market access.
Key Highlights of Report
- Focus Sectors:
- Textiles manufacturing & apparel
- Chemical products
- Automotive
- Food processing
- Main Tools Used:
- Firm-level data
- Periodic Labour Force Survey (PLFS)
- Identified Challenges:
- Gaps in policy implementation at national/state level
- Limited awareness among MSMEs about government schemes
- Credit Access Trends (2020–2024) For:
- Micro & small enterprises: Increased from 14% to 20% access to credit through scheduled banks
- Medium enterprises: Increased from 4% to 9% access
Report Highlights Major Challenges Facing MSMEs
Credit Gap:
- Only 19% of MSME credit demand met (FY21)
- Estimated unmet credit: ₹80 lakh crore
- Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) needs reforms
Skill Shortages:
- Lack of formal vocational/technical training in the workforce
- Low investment in R&D, innovation, and quality upgrades
Technology Barriers:
- Unreliable electricity, poor internet, high costs
- Low awareness or access to state government technology schemes
Marketing & Branding:
- Outdated technology and weak marketing reduce competitiveness
Low Awareness of Schemes:
- Many MSMEs are unaware of central and state support policies despite Budget announcements
Recommendations of Report
- Stronger state-level policy design and execution
- Consistent monitoring and data integration
- Improved stakeholder engagement
- Focus on:
- Digital marketing training
- Partnerships with logistics providers
- Platforms for direct market linkages, especially in northeastern and eastern states
- Promote a robust, adaptive, cluster-based policy framework to boost innovation and competitiveness
Ways to Improve MSME Competitiveness
- Finance Access:
- Reform CGTMSE
- Support NBFCs
- Ease state subsidy rules
- Skilling:
- Align vocational training with industry needs
- Build financial literacy for MSME owners
- Data Systems:
- Upgrade UDYAM portal with cluster-wise, state-level data
- Technology & Innovation:
- Create targeted policies
- Strengthen Institutes for Collaboration (IFC) to drive innovation
What are MSMEs?
- Definition: Businesses categorized by investment in plant/machinery and annual turnover
- Role: Drive entrepreneurship, employment, and industrialization, especially in rural/semi-urban areas
Classification of MSMEs
| Type of Enterprise | Investment limit (revised) | Turnover limit (revised) |
| Micro | ₹2.5 crore (was ₹1 crore) | ₹10 crore (was ₹5 crore) |
| Small | ₹25 crore (was ₹10 crore) | ₹100 crore (was ₹50 crore) |
| Medium | ₹125 crore (was ₹50 crore) | ₹500 crore (was ₹250 crore) |
Budget Initiatives for MSMEs
- Credit guarantee cover raised from ₹5 crore to ₹10 crore
- 10 lakh customized credit cards (₹5 lakh limit) for micro enterprises on UDYAM portal
- Export Promotion Mission for export credit, tackling non-tariff barriers
- New ₹10,000 crore fund of funds for startups
Importance of MSMEs in Indian Economy
- Employment: About 1 crore registered MSMEs employing ~7.5 crore people
- Manufacturing Share: 36% of total manufacturing output
- Export Share: 45% of total Indian exports