R. Suryamurthy
A new NITI Aayog report released today pinpoints the urgent need for sweeping reforms to unlock the stifled potential of India’s MSMEs. “Enhancing Competitiveness of MSMEs in India,” prepared with the Institute for Competitiveness, demands immediate action across financing, skilling, innovation, and market access to boost their national and global standing. The report underscores that comprehensive reforms are critical to empower this vital sector and drive India’s economic growth.
The report pinpoints key areas demanding immediate attention to overcome the challenges hindering MSME competitiveness. To foster sustainable integration into global value chains, the analysis of firm-level data and the Periodic Labour Force Survey (PLFS) necessitates implementing targeted interventions within the textiles manufacturing and apparel, chemical products, automotive, and food processing sectors. This requires addressing sector-specific hurdles and capitalising on unique opportunities. Furthermore, the report reveals significant gaps in the implementation and awareness of existing national and state policies, demanding concerted efforts to improve the dissemination and understanding of available support mechanisms among MSMEs.
Despite some progress in formal credit access, a substantial credit gap remains. The report urgently calls for a revamped Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), supported by stronger institutional collaboration and the provision of more targeted financial services, to bridge the estimated ₹80 lakh crore unmet credit demand.
Addressing the critical issue of skill shortages requires large-scale initiatives to provide formal vocational and technical training to the significant portion of the MSME workforce currently lacking these essential skills. Simultaneously, to foster innovation and maintain competitiveness, MSMEs must be empowered to increase investment in research and development (R&D) and quality improvement measures. Overcoming barriers to technology adoption demands a reliable electricity supply, robust internet connectivity, and measures to reduce high implementation costs. Moreover, state governments must take proactive steps to ensure MSMEs are not only aware of but can readily access existing schemes designed to support technological advancement. Analysis of industrial clusters highlights the critical need for programs that upgrade outdated technologies and enhance marketing and branding capabilities.
The report concludes that to enhance the impact of MSME support policies, there must be a stronger emphasis on state-level design and implementation, characterised by consistent monitoring, better data integration, and improved stakeholder engagement in the policy development process.
To truly unlock the potential of India’s MSMEs as drivers of sustainable economic growth, the report urgently recommends enhanced support through digital marketing training, the facilitation of partnerships with logistics providers, and the creation of platforms for direct market linkages, particularly in high-growth potential regions like India’s northeastern and eastern belts. The overarching imperative is to establish a robust, adaptive, and cluster-based policy framework at the state level that actively fosters innovation, enhances competitiveness, and empowers MSMEs to drive inclusive economic transformation across the nation. The time for decisive action is now to ensure India’s MSMEs can realize their full potential.