New Delhi, May 2 (KNN) NITI Aayog has released a detailed report titled ‘Enhancing MSMEs Competitiveness in India,’ developed in collaboration with the Institute for Competitiveness.
The document presents a strategic blueprint for strengthening India’s Micro, Small and Medium Enterprises through systematic reforms across financing, skills development, innovation, and market access domains.
The report thoroughly examines the challenges impeding MSME competitiveness in India, utilising firm-level data and insights from the Periodic Labour Force Survey.
It offers targeted recommendations to promote sustainable integration of these enterprises into global value chains, with particular focus on four key sectors: textiles manufacturing and apparel, chemical products, automotive, and food processing. The analysis also evaluates existing national and state policies, identifying implementation gaps and the limited awareness among MSMEs regarding available support mechanisms.
A significant finding highlights the improvement in formal credit access for MSMEs between 2020 and 2024. The proportion of micro and small enterprises accessing credit through scheduled banks increased from 14 per cent to 20 per cent, while medium enterprises experienced growth from 4 per cent to 9 per cent.
Despite this progress, a substantial credit gap persists, with only 19 per cent of MSME credit demand formally addressed by FY21, leaving an estimated Rs 80 lakh crore unmet.
The report advocates for a revamped Credit Guarantee Fund Trust for Micro and Small Enterprises, enhanced institutional collaboration, and more targeted financial services to address these shortfalls.
Skill shortages emerge as another critical challenge, with a substantial portion of the MSME workforce lacking formal vocational or technical training, thereby limiting productivity and scalability.
The report notes insufficient investment in research and development, quality improvement, and innovation across the sector. Additionally, MSMEs face significant barriers to technology adoption, including unreliable electricity supply, inadequate internet connectivity, and prohibitive implementation costs.
Despite various state government schemes designed to support technological advancement, many enterprises remain unaware of these resources or unable to access them effectively.
The report concludes that while numerous MSME support policies exist and recent Union Budgets have prioritised the sector, their effectiveness is hampered by low awareness among target beneficiaries.
To enhance policy impact, it recommends stronger state-level design and implementation frameworks, consistent monitoring processes, improved data integration systems, and greater stakeholder engagement in policy development.
According to the report, India’s MSMEs can emerge as a crucial driver of sustainable economic growth through targeted interventions, stronger institutional collaborations, and enhanced global competitiveness.
Key recommendations include expanded digital marketing training, strategic partnerships with logistics providers, and creation of platforms facilitating direct market linkages, particularly in high-growth potential regions such as India’s northeastern and eastern belts.
The report advocates for a robust, adaptive, and cluster-based policy framework at the state level to foster innovation, enhance competitiveness, and enable MSMEs to drive inclusive economic transformation across the country.
(KNN Bureau)
