Building an Ecosystem Conducive to the Expansion of MSMEs in India

Favorable policy vicissitudes can empower micro and small enterprises and catalyze job creation.
Building an Ecosystem Conducive to the Expansion of MSMEs in India

Over the past few years, we have seen the Indian Government actively prioritizing MSMEs. This is due to the fact that this vulnerable segment truly acts as a catalyst of growth, owing to its capacity for accelerated job creation and progress. Being the backbone of our economy in India, MSMEs clearly requires robust support in terms of resources and technology. Furthermore, the importance of strong and strategic policy backing the sector cannot be over-emphasized. Fortunately, changes in policy are being fuelled at the ground level by organizations that work closely with businesses in the sector. 

Policy Transformation

With the Indian economy technically in a recession, a two-pronged policy thrust is highly recommended to provide relief to MSMEs and pave the way to appropriate job creation. One part would address current exigencies in the sector, and the second, to create a conducive environment for sustainable growth in the near future. 

Several research organizations and think tanks in India and abroad actively carry out research and analysis in the space, also providing recommendations to government authorities towards an improved policy that would support equity and job creation.

Digitization and Digital Literacy

Digitization of enterprises is being promoted by the government, as it is an enabler of all-around progress. Companies with technical backing are empowered to stay ahead of the game and enhance efficiency. Besides, digitization is also a stepping stone in the transition from informal to formal enterprise, which will open up avenues for formal credit, market linkages as well as increased tax revenue.

Several organizations work with small enterprises toward driving digital literacy and digital transformation. Skilling challenges are being addressed via training so that employees can perform at high productivity levels.

Financial Support

The MSME sector is second only to agriculture in terms of employment generation, accounting for a whopping 48% of India’s exports. Over the last two years, the Union Budget infused INR 15,700 and INR 21,400 crores respectively into this sector. The term MSME was, in fact, redefined to include additional micro and small units, thus benefitting added MSMEs. Under Atmanirbhar Bharat Abhiyan, numerous measures have been initiated. 

Access to Credit

Access to finance, one of the key challenges faced especially by remotely located women and youth entrepreneurs, could be handled by providing easy access to reliable credit. Addressing the credit and liquidity crunch will go a long way. Further to this, the introduction of improved regulatory and compliance norms will be a big enabler. Reasonable and flexible interest rates could serve millions in the sector and help them out of the current monetary crisis.


The MSME sector clearly has an enormous economic, social and environmental impact. However, several challenges persist, such as finding ways to more efficiently use crucial resources like energy, water, and raw materials, and implement more environmentally sustainable production processes. Modernization and adoption of environment-friendly options will lead to the creation of sustainable opportunities. 


Setting up associations to further cooperation with research and technology institutions as well as with educational or training programs will go a long way in helping MSMEs strengthen their foothold in the ecosystem. Establishing a spirit of collaboration between the private sector, government and the academic and research community will definitely prove advantageous and promote economic development.

While government efforts thus far have been good, it is now crucial to modify policy and provide the much-needed impetus in this distressed sector, and unlock essential employment opportunities. Measures to deliver ease of doing business, bring transparency, broaden networks, ease cash and credit availability, and repayment backed by digital adoption and literacy will prove instrumental in the industry reaching new heights. 

Publish Date
Not Sponsored
Live: People Reading Now