India’s Micro, Small and Medium Enterprises (MSME) sector is witnessing a significant transformation as the Government intensifies efforts to strengthen rural and semi-urban businesses through formalisation, digitalisation, credit expansion, and market access initiatives. According to recent updates, MSMEs now contribute more than 31% to India’s GDP, account for nearly 48.58% of exports, and support the livelihoods of approximately 32.8 crore people across the country.
The sector remains one of the strongest pillars of India’s domestic economy, especially in rural and semi-urban regions where small enterprises drive local production, non-farm employment, entrepreneurship, and regional development. With more than 7.47 crore enterprises operating across manufacturing, services, and trade activities, MSMEs have emerged as the country’s second-largest source of employment after agriculture.
Formalisation Gains Momentum
One of the Government’s biggest priorities has been bringing informal and unregistered businesses into the formal economy. This has accelerated through the Udyam Registration Portal and the Udyam Assist Platform (UAP).
As of March 2026, over 7.9 crore enterprises have been registered through these platforms, including 4.72 crore registrations on the Udyam Portal and 3.21 crore registrations through the Udyam Assist Platform.
The Udyam Assist Platform, launched in January 2023, specifically targets informal micro enterprises that previously lacked formal registration and access to institutional finance. By integrating such enterprises into the formal credit ecosystem, the Government aims to improve access to priority sector lending and other support schemes.
The inclusion of retail and wholesale traders under the MSME classification from July 2021 has further expanded the sector’s formal coverage and enabled more businesses to access institutional benefits and financing support.
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Expanded Credit Support for MSMEs
Access to affordable and timely credit remains a critical challenge for MSMEs, particularly micro-enterprises operating in rural areas. To address this, the Government has strengthened multiple financial support mechanisms.
Under the Credit Guarantee Scheme (CGS), implemented through the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), the guarantee coverage ceiling for banks has been increased from ₹5 crore to ₹10 crore under the Union Budget 2025–26.
The revised framework is designed to improve collateral-free lending for micro and small enterprises while encouraging first-generation entrepreneurs to access institutional finance. The Government has also introduced special benefits for transgender-led enterprises, including a 10% concession in guarantee fees and enhanced guarantee coverage of up to 85%.
In addition, the Self-Reliant India (SRI) Fund continues to provide equity support to MSMEs through a Fund of Funds mechanism. The initiative aims to mobilise ₹50,000 crore in MSME investments, with Government support of ₹10,000 crore and the remaining amount expected from private equity and venture capital participation.
As of November 2025, the SRI Fund had supported 682 MSMEs with investments worth ₹15,442 crore. The Union Budget 2026–27 has further allocated an additional ₹2,000 crore to strengthen the fund and expand risk capital support for micro enterprises.
The Emergency Credit Line Guarantee Scheme (ECLGS), introduced during the COVID-19 pandemic, also played a major stabilising role for small businesses. By January 2023, guarantees worth ₹3.61 lakh crore had been issued under the scheme, benefiting 1.19 crore borrowers. As per the research report, approximately 14.6 lakh MSME accounts were prevented from slipping into non-performing asset (NPA) status because of the scheme.
Stronger Legal Protection Against Delayed Payments
Delayed payments continue to be one of the biggest operational challenges faced by MSMEs. To address this issue, the Government has strengthened legal and institutional support systems under the MSMED Act, 2006.
The Act mandates that buyers must clear payments to Micro and Small Enterprises within 45 days of accepting goods or services. To resolve payment disputes, 161 Micro and Small Enterprises Facilitation Councils (MSEFCs) have been established across states and union territories.
The MSME SAMADHAAN Portal, launched in 2017, enables enterprises to file and monitor delayed payment complaints online, reducing dependency on physical processes and intermediaries.
According to the updates, dues worth ₹1.65 lakh crore had been cleared to MSMEs by Central Ministries, Departments, and Central Public Sector Enterprises between May 2020 and December 2022 through the dedicated monitoring framework.
The Government has also launched an Online Dispute Resolution (ODR) Portal in June 2025 to provide end-to-end digital resolution of delayed payment cases and reduce the cost and time involved in dispute settlement.
Digital Platforms Strengthening MSME Ecosystem
Digitalisation has become central to improving MSME competitiveness and operational efficiency. The Government has developed a broad digital ecosystem to support enterprise registration, financing, procurement, dispute resolution, and market access.
Key digital platforms supporting MSMEs include:
- Udyam Portal for MSME registration
- Government e-Marketplace (GeM) for public procurement
- Trade Receivables Discounting System (TReDS) for invoice financing
- MSME Champions Portal for grievance redressal
- MSME SAMBANDH for procurement monitoring
- PMEGP Portal for project approvals and tracking
- PM Vishwakarma Portal for artisan support
- Online Dispute Resolution Portal for digital dispute settlement
These platforms are helping MSMEs gain access to government procurement opportunities, improve compliance management, obtain faster payments, and connect with broader markets.
PMEGP and PM Vishwakarma Driving Rural Entrepreneurship
The Prime Minister’s Employment Generation Programme (PMEGP) continues to play a major role in promoting self-employment and micro-enterprise creation in non-farm sectors.
Between FY 2021–22 and FY 2025–26, the scheme supported more than 5.8 lakh projects, with bank loans exceeding ₹60,000 crore sanctioned under the programme. During the same period, over ₹13,450 crore in margin money subsidy was disbursed, generating an estimated 36.3 lakh employment opportunities.
The PM Vishwakarma Scheme, launched in 2023, has also emerged as a major initiative for supporting traditional artisans and craftspeople across 18 trades. The scheme provides skill development, toolkit incentives, concessional credit, and market linkage support.
As of March 2026, more than 30 lakh artisans had registered under the scheme, while over 23.7 lakh beneficiaries completed basic training programmes. Nearly 5.9 lakh loans worth around ₹5,050 crore had also been approved under the initiative.
Government Focuses on Inclusive MSME Growth
The Government’s broader MSME strategy now focuses on addressing structural challenges related to finance, formalisation, compliance, and market integration. Recent measures such as the ₹10,000 crore SME Growth Fund, additional allocations to the SRI Fund, and mandatory TReDS adoption across Central Public Sector Enterprises are expected to further strengthen the MSME ecosystem.
Going forward, stronger coordination between digital platforms, financial institutions, and grassroots implementation agencies will remain essential to ensure that the benefits of these schemes reach rural entrepreneurs, artisans, traders, and first-generation business owners across the country.
Source: PIB
