New Delhi, May 19 (KNN) India’s Micro, Small and Medium Enterprises (MSME) sector continues to face a significant addressable credit gap of approximately Rs 30 lakh crore, representing about 24 percent of the total credit demand, according to a recent report published by the Small Industries Development Bank of India (SIDBI).
The report acknowledges that while credit supply to MSMEs has increased, substantial financing challenges remain across various segments of the sector.
The services sector is experiencing a higher credit gap of around 27 percent compared to the overall average. Gender disparity in access to credit is particularly pronounced, with women-owned MSMEs facing a credit gap of 35 percent, significantly higher than the 20 percent gap experienced by their male-owned counterparts.
Many women entrepreneurs continue to rely on informal credit sources to fulfil their business requirements.
Among enterprise categories, medium-sized businesses encounter the greatest challenges with a credit gap of 29 percent, primarily due to their higher capital requirements for scaling operations. Micro and small enterprises also struggle with securing adequate funding for their business needs.
At the business activity level, trading enterprises face the most substantial credit gap at approximately 33 percent. This is largely attributed to trading businesses typically lacking sufficient collateral to secure formal loans from financial institutions.
Despite these ongoing challenges, SIDBI remains optimistic about the MSME sector’s potential to become a key driver of economic growth as India progresses toward its ‘Viksit Bharat’ goal.
The report highlights encouraging trends including strong growth in women entrepreneurship and sustainability-focused businesses. Increasing formalisation of MSMEs and the expanding adoption of digital lending platforms are expected to gradually help narrow the credit gap.
The report emphasises the necessity for targeted policy initiatives to address specific gaps in segments such as services and women-led enterprises.
To foster continued growth in the sector, the report recommends enhanced support for MSMEs in improving market access and productivity.
Government assistance in areas including digital adoption, skill development, labour availability, and infrastructure development will be essential for the sustainable growth of the MSME sector.
(KNN Bureau)
