MSMEs are major contributor to economic growth.
However, they face
certain bottlenecks and in order to harness their full potential it is
imperative to create conducive environment to reduce their productivity.
Ministry of MSME is undertaking a comprehensive exercise to gather
grassroot level challenges and generate actionable recommendations to
reduce cost and enhance competitiveness of MSMEs in India.
Lower Unit Costs-Higher-Value MSME exports-Deeper GVC
participation
A three tier program with a bottom-up approach from cluster, Zonal to
national level has been adopted.
National Summit-Interventions for Cost effectiveness & enhanced
competitiveness of MSME (Last week of December 2025). The session
may be attended by more than 3000 MSME stakeholders.
Zonal Conference-Deliberation on cluster workshop insights and
finalization of Actionable Recommendations (December 01-08).
Cluster level workshops-Identification of grassroot-level challenges &
recommendations (75 cluster workshops completed all over India
covering 250+ identified clusters)
6700+ participantsincluding 4500 MSME units, 450 MSME associations
and Multiple government departments & organisations
Got 6000 inouts/feedbakcs
Cluster level challenges & recommendations are key foundations for the
zonal conferences (11)
Objective: facilitate deliberation on challenges & recommendations
identified during the cluster workshops
Consolidate the insights into ‘Actionable Recommendations’
Outcome:
Validation and finalization of ‘Actionable recommendations’
Whole of Government Approach – enhanced collaboration between
Central & State Governments, Industry Associations and MSME units
Cost and
Competitiveness
Reducing Enhancing
Cost productiviity
[Link] & Capital flow
[Link] of inputs and raw 1. Technology
materials 2. IT/AI
[Link] 3. Strengthening
[Link] & Compliance [Link]
[Link] & Supply chain 5. Innovation and R&D
[Link] & Standards
The main issues discussed under various heads mentioned above along
with recommendations are given below:
1. Financial & Capital flow: Lack of export credit incentives which
were withdrawn, limited access to formal finance and working capital,
lack of incentives for green chemistry initiatives, delayed disbursement
of sanctioned incentives, limited access to long term affordable finance,
delayed payments, success to timely and affordable credit, stringent
collateral and eligibility requirements by Banks.
Recommendations: Reintroduce the Credit Linked Capital Subsidy
Scheme, easy credit guarantee and low-interest rate scheme, tax
incentives for adopting sustainable processes, inclusion of SEZ units
under MSME Credit Guarantee Schemes, credit insurance instruments
on the lines of ECGC to be put in place for domestic market, expand the
scope and increase the cap of collateral free loans especially for Micro
and Women enterprises, strengthen digital lending infrastructure by
integrating data from GST, Udyam registration and other platforms
RBI should arrange more town hall meetings between banks and
MSMEs
Delay payments: Intiative to be taken for strict adherence by corporates
for MSMEs schemes and traders. Traders may also be explored to be
included under 43b(h). more teeth to be given to MSME D Act for
compliance to the judgement given by the council. Implement strict
payment timelines under MSME Samadhan portal and digital invoice
discounting. The financial limit of DIC level delay payment cases should
be increased by four times so that maximum case can be solved at DIC
level in place of Central Office of State Government. Create a
centralized digital platform for real-time monitoring and grievance
redressal of delayed payments.
2. Cost of Input and raw material:
Prohibitive land cost: and cost constitute a massive portion (50-70%) of
the total project cost for and MSME.
Recommendation: Implement a 30% upfront payment model (with the
balance in 5-7 year EMIs) for land in both GIDC estates and private
industrial parks.
Overview of MSMEs:
Rising credit flow to MSMEs
Bank credit to MSMEs grew faster then credit disbursal to large
enterprises. Credit flow to MSMEs tripled in last 11 years (01.04.14 to
30.06.2025). It is expected to be Rs. 65 Lakh Crore in 2025-30.
Corpus infusion of Rs. 9000 Crore (2023-24)
Credit Guarantee limits enhanced from Rs. 5 Crore to Rs 10 Crore
Credit Guarantee fee reduced
Key challenges
Share of MSMEs in credit remains low (19.7%)
Low ticket size Micro-6.69 Lakh, Small-64.38 Lakh, Medium-159.19 Lakh
and over all MSME – 12.78 Lakh Rs.
Credit Flow to Micro enterprises remain low (48%) where as share of
Micro enterprises in MSME is 98%
TReds revamping-Challenges:
Corrporate buyers noy yet onboarded
No. of transacting buyers less
Export invoice discounting not in TreDS
TReD-X for exports
Set a goal of developing 200 clusters under cluster development
program in the next 5 years
They discussed around 300+ issues that were shortlisted among the
issues along with recommendations highlighted by several
MSMEs/industrial associations during cluster workshops. Main Industrial
associations that highlighted issues in the cluster workshops include
Rajkot Chamber of Commerce and Industry, Morbi Ceramic
manufacturers Association, Ahmedabad Chamber of Commerce Welfare
Foundation, Surat Jewellery Manufacturers Association, Sitapura Gems
& Jewellery Industry Association, Federation of Kutch Industries
Association, Indian Textile Accessories and Machinery Manufacturers’
Association, Texofab, FSSI/Vadodara and Laghu Udyog Bharati. The
sectors which participated in the exercise include Gems & Jewellery,
Chemical, Pharma, Textile, Electronics, Engineering goods, Ceramics,
Stone Industry, Handicrafts etc.
Comments: the Industry Associations are happy that they are being
consulted for the policy changes by Government.
They opine that so far policies are formed by those people who are
sitting in air conditioned rooms without any ground level inputs
Pharma bodies representation from Gujarat in the whole exercise felt to
be very less.
Out of the issues discussed during the session, more number of issues
are from GST complexity and reverse taxation in several sectors
World level issues like US tariffs and Ukraine-Russia war were also
discussed due to their effect on Morbi Ceramic industry and Handicraft
industry in Rajasthan, respectively.
Several MSMEs and Industrial Associations asked to reintroduce Credit
Linked Capital Subsidy Scheme (CLCSS) with interest subvention to
help MSMEs improve their technology, productivity and competitiveness