Executive Summary:
This document presents the Ministry of MSME's response to questions regarding the closure of MSME units. It provides data on enterprise registration and shutdowns since July 1, 2020, details government schemes for MSME support, and outlines steps taken to revive and financially support MSMEs, including measures implemented during and after the COVID-19 pandemic, and those announced in the Budget 2025. The data is current up to July 28, 2025.
Key Points / Main Content:
MSME Registration and Closure Data:
* 6.62 crore enterprises registered on the Udyam/Udyam Assist Platform since 01.07.2020.
* The number of enterprises registered, and the number of enterprises that shut down, are provided year-wise, from 2020-21 to 2024-25, and for the period from 01.04.2025 to 28.07.2025.
* As per the Udyam Portal, the proportion of MSMEs shut down is 0.15% of those registered since 01.07.2020.
* Reasons for deregistration include change in ownership, certificate no longer required, duplicate registration, and enterprise shutdown.
Government Support and Revival Schemes:
* The Central Government supplements State/UT efforts through schemes like Prime Minister's Employment Generation Programme, Credit Guarantee Scheme for Micro and Small Enterprises, Micro and Small Enterprises Cluster Development Programme, RAMP, SRI Fund, PM Vishwakarma and MSME Champions Scheme.
Financial Support and Relief Measures:
* Emergency Credit Line Guarantee Scheme (ECLGS) provided Rs. 5 lakh crore during the COVID-19 pandemic and was operational until 31.03.2023.
* Non-tax benefits are extended for 3 years in case of an upward change in the status of MSMEs.
* Rs. 50,000 crore equity infusion through Self Reliant India (SRI) Fund, with Rs. 10,000 crore from the Government of India.
* Vivad se Vishwas Scheme introduced on 11.04.2023, to provide relief from the adverse impact of COVID-19. 95% of forfeited amounts related to bid/performance security will be returned to MSMEs in cases of contract failure during the Covid period.
Budget 2025 Announcements:
* Micro and Small Enterprises Credit Guarantee coverage enhanced from Rs. 5 crore to Rs. 10 crore.
* Term loans up to Rs. 20 crore for well-run exporter MSMEs
* Customised Credit Cards for Micro Enterprises with a credit limit up to Rs. 5 lakh, registered on Udyam portal.
Impact Analysis
MSMEs:
* Impact: MSMEs are directly affected by the schemes and policies outlined, which aim to provide financial support, promote growth, and ease operational challenges. The data on registration and closures offers insight into the sector's current state.
* Action Required: MSMEs should review the details of available schemes and initiatives to determine their eligibility and apply for relevant support. Those facing challenges should explore the relief measures and financial assistance programs mentioned.
State/UT Governments:
* Impact: State/UT Governments are expected to work in conjunction with the Central Government to implement and support MSME development initiatives.
* Action Required: State/UT Governments should coordinate with the Central Government to effectively implement MSME schemes and policies within their jurisdictions.
Government of India (Ministry of MSME and Ministry of Finance):
* Impact: The Government is responsible for formulating and implementing policies and schemes to support the MSME sector.
* Action Required: The Government needs to continue monitoring the performance of MSMEs, refining policies based on data and feedback, and ensuring effective implementation of support programs.
Key Entities Referenced
Ministry of Micro, Small and Medium Enterprises: The Indian government ministry responsible for the formulation and administration of rules, regulations and laws relating to micro, small and medium enterprises in India.
SHRI BRIJENDRA SINGH OLA: Member of Lok Sabha who raised the starred question regarding the closure of MSME units.
SHRI JITAN RAM MANJHI: Minister of Micro, Small and Medium Enterprises who provided the answer to the Lok Sabha starred question.
Udyam Udyam Assist Platform: A platform of the Ministry of MSME for the registration of enterprises.
Prime Minister's Employment Generation Programme: A scheme for employment generation under the MSME sector.
Credit Guarantee Scheme for Micro and Small Enterprises: A scheme to provide credit guarantee for loans to micro and small enterprises.
Emergency Credit Line Guarantee Scheme ECLGS: A scheme announced during the COVID-19 pandemic to provide credit to businesses, including MSMEs.
Self Reliant India SRI Fund: An equity infusion scheme aimed at providing growth capital to deserving and eligible units of the MSME sector.
GOVERNMENT OF INDIA
MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES
LOK SABHA
STARRED QUESTION NO.*271
TO BE ANSWERED ON: 07.08.2025
CLOSURE OF MSME UNITS
*271. SHRI BRIJENDRA SINGH OLA:
Will the Minister of MICRO, SMALL AND MEDIUM ENTERPRISES be pleased to state:
(a) whether it is a fact that a large number of MSME units have closed down during the last few
years and if so, the details thereof and the reasons therefor;
(b) whether the policies of the Government are responsible for the closure of these MSME units
and if so, the details thereof;
(c) whether the Government is formulating any schemes or taking any steps to revive these MSME
units and if so, the details thereof; and
(d) if not, the reasons therefor?
ANSWER
MINISTER OF MICRO, SMALL AND MEDIUM ENTERPRISES
(SHRI JITAN RAM MANJHI)
(a) to (d): A statement is laid on the Table of the House.STATEMENT REFERRED TO IN REPLY TO LOK SABHA STARRED QUESTION NO.
*271 FOR 07.08.2025 REGARDING "CLOSURE OF MSME UNITS".
(a) and (b): In the last five years, since 01.07.2020, 6.62 crore enterprises have registered on
Udyam / Udyam Assist Platform of Ministry of MSME. The year-wise details of enterprises shutdown
is given below:
2025-26 Total
Financial (01.04.2025
2020-21 2021-22 2022-23 2023-24 2024-25
Year to
28.07.2025)
Enterprises
28,29,746 51,22,829 85,47,152 2,48,93,528 2,06,55,273 42,08,995 6,62,57,523
Registered
Enterprises
Shut 175 6,222 13,290 19,828 39,446 20,029 98,990
Down
Report Source: Udyam Registration Portal
There are various reasons for an enterprise to deregister such as change in the company owner,
certificate not required, duplicate registration, shut down of enterprise and others. As per Udyam
Portal, the number of MSMEs shut down as a proportion of the total those which have registered since
the revision in the definition on 01.07.2020 is only 0.15%.
(c) and (d): The Central Government supplements the efforts of the State/UT Governments through
various schemes, programmes and policy initiatives for overall development and promotion of
MSMEs such as Prime Minister's Employment Generation Programme, Credit Guarantee Scheme for
Micro and Small Enterprises, Micro and Small Enterprises- Cluster Development Programme , Raising
and Accelerating MSME Performance(RAMP), SRI Fund, PM Vishwakarma and MSME Champions
Scheme etc.
Further, in order to strengthen, extend financial support, revive and reconstruct MSMEs, the
Government of India has taken the various steps, which inter alia includes the following:
(i) To provide the credit, Rs. 5 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS), for
businesses, including MSMEs was announced during COVID-19 pandemic. The Scheme was
operational till 31.03.2023. As per a research report dated 23.01.2023 of the State Bank of India
on ECLGS, almost 14.6 lakh MSME accounts, of which about 98.3 % of the accounts were in
the Micro and Small Enterprises categories, were saved.
(ii) Non-tax benefits extended for 3 years in case of an upward change in status of MSMEs.
(iii) Rs. 50,000 crore equity infusion through Self Reliant India (SRI) Fund, which has a provision of
Rs.10,000 crore from Government of India and Rs. 40,000 crore through Private Equity /
Venture Capital funds. This Scheme is aimed at providing growth capital to the deserving and
eligible units of MSME sector.: 2 :
(iv) To protect and extended relief to MSMEs from the adverse impact of the COVID-19 pandemic
and to ensure the sustainability of their operations, the Ministry of Finance, Government of
India vide O.M. No. F.1/1/2023-PPD dated 11.04.2023 introduced Vivad se Vishwas Scheme.
In cases of failure by MSMEs to execute contracts during the Covid period, 95 per cent of the
forfeited amount relating to bid or performance security, will be returned to them by government
and government undertakings.
To provide financial support to MSMEs, in Budget announcement 2025, the Government of
India has taken the various steps which inter-alia includes the following:
i. For Micro and Small Enterprises Credit Guarantee coverage enhance from Rs. 5 crore to Rs. 10
crore.
ii. Term loans up to Rs. 20 crore for well-run exporter MSMEs
iii. Customised Credit Cards with following features:-
a) Micro Enterprises
b) Credit limit upto Rs.5 lakh
c) Micro enterprises registered on Udyam portal
******