The NITI Aayog has released a report focused on enhancing the competitiveness of Micro, Small and Medium Enterprises (MSMEs) in India. The comprehensive document employs firm-level data and insights from the Periodic Labour Force Survey to analyze challenges faced by MSMEs and offers recommendations for sustainable integration into global value chains. Specifically addressing sectors including textiles manufacturing and apparel, chemical products, automotive industry, and food processing, the report identifies sector-specific opportunities.
Key findings highlight improvements in MSMEs' access to formal credit between 2020 and 2024, noting that while there has been progress, a significant formal credit gap remains unfilled. This gap is estimated at 80 lakh crore as of FY21, with the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) having increased coverage but still facing limitations in addressing needs effectively.
The report underscores skill shortages within MSMEs as well as inadequate investment in research, developmentquality improvement, innovation. Barriers such as lack of reliable electricity supply, poor internet connectivity, high implementation costs, and limited access to state government schemes for technological support are also pinpointed. It emphasizes the critical role of cluster-based improvements like upgrading technologies and enhancing marketing capabilities.
To boost MSME competitiveness, the report recommends a revitalized CGTMSE with institutional collaboration and targeted services to bridge credit gaps. Digital marketing training, partnerships with logistics providers, and platforms for direct market linkages in regions with high growth potential are advised. At the state level, a robust policy framework focusing on innovation enhancement and cluster-focused efforts is suggested.
The analysis concludes that while existing policies support MSMEs through Union Budget investments, increased effectiveness requires greater awareness, stronger state-level design and implementation, consistent monitoring, improved data integration, and stakeholder engagement in crafting impactful policies. The goal is to utilize these interventions to stimulate sustainable economic growth by empowering India's MSME sector, positioning them as major contributors to inclusive economic transformations.
Key Entities Referenced
NITI Aayog: A policy think tank of the Government of India responsible for shaping and driving economic, social and poverty-related policies.
MSMEs (Micro, Small and Medium Enterprises): Businesses classified as micro, small or medium enterprises, critical to the Indian economy as discussed in the report that addresses their competitiveness enhancement.
IFC: The International Finance Corporation contributes alongside NITI Aayog in preparing a report on enhancements for MSMEs competitiveness.
Institute for Competitiveness: An academic institution contributing to the research and recommendations aimed at improving the competitiveness of MSMEs as part of their collaboration with NITI Aayog.
Scheduled banks: Referring to banks recognized by or affiliated with the Reserve Bank of India, which facilitate credit access to MSMEs noted in the report's improvements from 2020-2024.
CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises): An entity aimed at addressing credit issues to MSMEs, but noted as having limitations despite its significant expansion.
Periodic Labour Force Survey (PLFS): A survey used by the report to analyze data impacting MSME competitiveness in India for recommendations on fostering sustainable integration and enhanced inclusion into global value chains.
NITI Aayog
NITI Aayog Releases Report on “Enhancing
Competitiveness of MSMEs in India”
Posted On: 02 MAY 2025 12:22PM by PIB Delhi
NITI Aayog today released the report on ‘Enhancing MSMEs Competitiveness in India’, prepared by NITI
Aayog in collaboration with the Institute for Competitiveness (IFC). The report presents a detailed blueprint
for unlocking the immense potential of India’s Micro, Small and Medium Enterprises (MSMEs) through
systemic reforms in financing, skilling, innovation and market access.
The report delves into the key challenges affecting the competitiveness of MSMEs in India. Using firm-level
data and the Periodic Labour Force Survey (PLFS), it provides recommendations to foster sustainable
integration and enhance their incorporation into global value chains. It focuses on four important sectors -
textiles manufacturing and apparel, chemical products, automotive and food processing while highlighting the
sector-specific challenges and opportunities that need to be addressed to unlock the potential of MSMEs in
India. The report examines current national and state policies, highlighting gaps in implementation and
limited awareness among MSMEs.
One of the important findings of the report is the notable improvement in MSMEs' access to formal credit.
Between 2020 and 2024, the share of micro and small enterprises accessing credit through scheduled banks
rose from 14% to 20%, while medium enterprises saw an increase from 4% to 9%. Despite these
improvements, the report reveals that a substantial credit gap remains. Only 19% of MSME credit demand
was met formally by FY21, leaving an estimated ₹80 lakh crore unmet. The Credit Guarantee Fund Trust for
Micro and Small Enterprises (CGTMSE) has expanded significantly, but still faces significant limitations. To
bridge the credit gap and unlock inclusive, scalable finance for MSMEs, the report calls for a revamped
CGTMSE, supported by institutional collaboration and more targeted services.
The report also highlights the pressing issue of skill shortages within the MSME sector. A large portion of the
workforce lacks formal vocational or technical training, which hampers productivity and limits the ability of
MSMEs to scale effectively. Many MSMEs also fail to invest sufficiently in research and development
(R&D), quality improvement, or innovation, making it difficult to stay competitive in national and global
markets. The report further points out that MSMEs face barriers in adopting modern technologies due to
unreliable electricity supply, weak internet connectivity and high implementation costs. Despite state
government schemes designed to support technological advancement in MSMEs, many enterprises are either
unaware of them or unable to access them. In its analysis of clusters, the report finds that upgrading outdated
technologies and improving marketing and branding capabilities are critical to improving competitiveness.
The report concludes that despite various MSME support policies and the recent boost to MSMEs through
Union Budgets, increased effectiveness is hampered by low awareness. To enhance policy impact, the report
recommends stronger state-level design and implementation, emphasising consistent monitoring, better data
integration and improved stakeholder engagement in policy development.
India's MSMEs can become a key driver of sustainable economic growth by focusing on targeted
interventions, building stronger institutional collaborations and enhancing global competitiveness. It calls for
enhanced support for MSMEs through digital marketing training, partnerships with logistics providers and
creating platforms for direct market linkages, especially in regions with high growth potential, such as India's
northeastern and eastern belts. It calls for a robust, adaptive and cluster-based policy framework at the state
level that fosters innovation, enhances competitiveness and enables MSMEs to drive inclusive economic
transformation.
Read the complete report: https://www.niti.gov.in/sites/default/files/2025-05/Enhancing_Competitiveness_of_MSMEs_in_India.pdf
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MJPS/SR
(Release ID: 2126063)