In a significant move aimed at strengthening India’s economic backbone, NITI Aayog has released a comprehensive report titled “Enhancing MSMEs Competitiveness in India”, developed in collaboration with the Institute for Competitiveness. The report presents a clear and thoughtful roadmap to unlock the vast potential of the country’s Micro, Small, and Medium Enterprises (MSMEs), which are central to employment generation and regional development.
With a deep understanding of the challenges faced by MSMEs, the report sheds light on persistent issues in areas like access to finance, skill development, innovation, and market reach. It uses data from firm-level studies and the Periodic Labour Force Survey to assess ground realities and recommend practical solutions. Focusing on critical sectors such as textiles, chemicals, automotive, and food processing, the report emphasizes the need for sector-specific reforms to strengthen competitiveness and integrate Indian MSMEs into global value chains.
Among its key findings is the notable progress in access to formal credit. From 2020 to 2024, there has been a visible rise in the number of MSMEs receiving credit from scheduled banks. However, the credit gap remains vast—with only 19% of total demand met formally by FY21, leaving a staggering ₹80 lakh crore unmet. While schemes like the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) have expanded, they continue to face structural limitations. The report urges a comprehensive overhaul of CGTMSE, recommending institutional partnerships and more targeted services to ensure finance is inclusive and scalable.
Equally concerning is the shortage of skilled workers within the MSME sector. Many businesses operate without access to formal vocational or technical training, directly affecting their productivity and capacity to scale. Compounded by limited investment in research and development, as well as in innovation and quality enhancement, MSMEs often find themselves struggling to remain competitive. The report also highlights the slow adoption of modern technology due to high implementation costs, unreliable electricity, and patchy internet connectivity—factors that disproportionately affect businesses in less developed regions.
Though state governments have rolled out various schemes to support MSMEs, awareness and accessibility remain low. Many entrepreneurs remain unaware of the assistance available to them, further limiting their growth. The report argues that upgrading old technologies, improving branding, and fostering digital marketing skills are essential to enhancing the market presence of MSMEs. Strengthening logistics partnerships and establishing direct market linkages, especially in emerging regions like the northeastern and eastern states, are also recommended to help MSMEs tap into their full potential.
Importantly, the report calls for better policy execution through cluster-based approaches, improved monitoring, stronger data systems, and stakeholder involvement at the grassroots level. It underscores that MSMEs, with the right support and reforms, can become a driving force for inclusive and sustainable economic transformation in India.
The findings carry a hopeful message—that with empathy, targeted reforms, and a renewed commitment from both government and industry, India’s MSMEs can rise to become not just survivors in a competitive world, but true engines of national progress.