Indian MSME Industry Analysis

MSMEs are being encouraged to market their products on the e-commerce site, especially through Government e-Marketplace (GeM), owned and run by the government, wherefrom Ministries and PSUs (public sector undertakings) source their procurement.

A revision in Micro Small and Medium Enterprises (MSME) definition was announced in the Aatmanirbhar Bharat Abhiyaan Scheme on May 13, 2020. The Ministry of Micro, Small, and Medium Enterprises, vide its gazette notification dated June 1, 2020, has announced the upward definition and criteria of the MSME. The new classification for MSME came into effect from July 1, 2020.

In the Union Budget 2025, the Government of India introduced a major revision to the MSME classification rules. Specifically, investment limits have been raised by 2.5 times, and turnover limits have been doubled. This change is designed to help MSMEs grow without losing access to important benefits and incentives, contributing to wider economic growth and more job opportunities.

As of March 2026, over 7.9 crore enterprises were registered across both platforms, 4.72 crore on the Udyam Portal and 3.21 crore on the Udyam Assist Platform. This marks a significant milestone in MSME digitization.

MSME exports have witnessed a sharp rise, increasing from Rs. 3.95 lakh crore (US$ 45.5 billion) in CY21 to Rs. 12.39 lakh crore in CY25. The number sriof exporting MSMEs has also grown, reaching 1,73,350 in CY25, underscoring their critical role in boosting India’s economy and strengthening global trade.

The Government e-Marketplace (GeM) has expanded procurement opportunities for MSMEs. During FY26, more than 11 lakh MSEs received over 51 lakh government orders worth Rs. 2.36 lakh crore (US$ 26.70 billion), accounting for 47.1% of the platform's Gross Merchandise Value (GMV). GeM achieved a cumulative GMV of Rs. 18.4 lakh crore (US$ 208.20 billion), including over Rs. 5 lakh crore (US$ 56.58 billion) during FY26.

Direct Benefit Transfers (DBT) under MSME ministry schemes stood at Rs. 6,83,917 crore (US$ 80.40 billion) in FY25. The Total Direct Benefit Transfer (Cumulative) under the Government of India's DBT ecosystem has crossed Rs. 51,64,612 crore (US$ 584.40 billion), according to the DBT Bharat portal.

The Union Budget for FY26 raised investment limits for MSMEs by 2.5 times and doubled turnover thresholds. The new limits are Rs. 2.5 crore investment and Rs. 10 crore turnover for micro enterprises, Rs. 25 crore investment and Rs. 100 crore turnover for small enterprises, and Rs. 125 crore investment with Rs. 500 crore turnover for medium enterprises.

The budgetary outlay for the Ministry of MSME increased to Rs. 24,566.27 crore (US$ 2.8 billion) in FY27, compared with Rs. 23,168 crore (US$ 2.7 billion) in FY26. The higher allocation underscores the government’s continued focus on strengthening MSME competitiveness, formalisation and access to finance.

As announced in the Union Budget 2025–26, the Government enhanced the ceiling for guaranteed coverage under the Credit Guarantee Scheme (CGS) from Rs. 5 crore (US$ 0.57 million) to Rs. 10 crore (US$ 1.13 million) for banks, effective for guarantees approved on or after April 1, 2025. The revised framework also provides MSEs promoted by transgender entrepreneurs with a 10% concession in guaranteed fees and enhanced guarantee coverage of up to 85%, effective from March 1, 2025.

The Government is promoting entrepreneurship and financial inclusion through the Pradhan Mantri Mudra Yojana (PMMY), which provides collateral-free institutional credit of up to Rs. 20 lakh (US$ 0.23 million) for non-corporate, non-farm income-generating activities. As of March 27, 2026, the scheme had sanctioned over 57.79 crore loans worth Rs. 40.07 lakh crore (US$ 453.39 billion), including Rs. 5.65 lakh crore (US$ 63.93 billion) sanctioned during FY26 (as on March 27, 2026).

The Government is strengthening payment security for micro and small enterprises (MSEs) through the MSME SAMADHAAN Portal, which enables online filing and monitoring of delayed payment cases. Since May 2020, Central Ministries, Departments and CPSEs have cleared dues worth Rs. 1,65,034 crore (US$ 18.67 billion) through the portal.

In June 2025, the Ministry of MSME launched the Online Dispute Resolution (ODR) Portal, the portal provides end-to-end digitized resolution of delayed payment cases. It further reduces the time and cost involved in redressal for MSEs across the country.

Skill development also remains central. In FY25, 12,576 programmes under the Entrepreneurship and Skill Development Programme (ESDP) benefitted 5,70,063 people.

The Government is supporting traditional artisans and craftspeople through the PM Vishwakarma Scheme, which provides skill development, toolkit incentives, market linkage support and collateral-free enterprise development loans of up to Rs. 3 lakh (US$ 3,395). As of March 2026, over 30 lakh artisans had registered under the scheme, with 26.7 lakh completing skill verification and 23.7 lakh undergoing basic training. In addition, nearly 5.9 lakh loans worth approximately Rs. 5,050 crore (US$ 571.42 million) had been approved, while more than 25.8 lakh toolkit incentive e-vouchers had been issued.

The Government is strengthening MSME competitiveness through its network of Technology Centres, which provide advanced manufacturing support, skill development and technology services. As of November 2025, 18 Technology Centres were operational across the country. Under the Technology Centres and Extension Centres (TCEC) Scheme, 20 new Technology Centres and 100 Extension Centres are being established. As of November 2025, 25 Extension Centres had trained 53,963 youth and supported 1,357 MSMEs, while nine centres established under the World Bank-supported Technology Centre System Programme (TCSP) had trained 59,357 individuals and assisted 1,520 MSMEs.

India’s intellectual property ecosystem continued to witness strong momentum in FY25, with 33,504 patents, 30,350 designs, 3,82,834 trademarks, 62 geographical indications, and 26,767 copyrights granted or registered during the year. The sustained rise in registrations reflects growing innovation activity, stronger brand formalisation, and increasing emphasis on intellectual property protection across industries.

Under the Scheme of Fund for Regeneration of Traditional Industries (SFURTI), the Government had approved 513 traditional industry clusters with a committed assistance of Rs. 1,332.95 crore (US$ 150.83 million) since FY2015-16. The initiative is expected to benefit approximately 3.03 lakh artisans, with 378 clusters operational and 135 under implementation as of March 2026.

State-level activity has also been strong. As of December 2024, 32 states and UTs had submitted Strategic Investment Plans, with over 200 proposals worth Rs. 3,000 crore (US$ 345.3 million) approved. By September 2025, 21,30,581 MSMEs had benefitted. Maharashtra, Tamil Nadu, and Uttar Pradesh together account for nearly 32% of all Udyam registrations.

As reported on the RAMP dashboard, all 36 States and Union Territories are participating in the programme, with 398 projects approved and an approved budget of Rs. 3,351.47 crore (US$ 379.22 million). The programme has incurred expenditure of Rs. 716.41 crore (US$ 81.06 million) and benefited over 21.36 lakh MSMEs.

As of May 2026, the Self-Reliant India (SRI) Fund had supported 761 MSMEs through investments worth Rs. 2,851 crore (US$ 322.59 million).

Women-owned MSMEs are steadily rising, now constituting 20.5% of Udyam registrations, contributing 18.73% to employment and 10.22% to turnover. In Union Budget FY26, the government also announced support for five lakh first-time women entrepreneurs from SC/ST backgrounds with loans of up to Rs. 2 crore (US$ 0.2 million).

Digital empowerment is gaining momentum. The MSE TEAM initiative, under the RAMP programme, will integrate 5 lakh MSEs (half of them women-owned) with ONDC, eKhadi, MSME Global Mart, and GeM to strengthen their e-commerce presence.

Private sector and global partnerships have also shaped the MSME ecosystem. DealShare announced a Rs. 1,000 crore (US$ 120 million) investment over five years in MSME partners. FinAGG Technologies raised US$ 11 million in Series A funding in 2024, backed by Tata Capital and SIDBI.

Internationally, NSIC renewed cooperation with Korea’s KOSME in February 2023 to strengthen bilateral MSME collaboration.

India’s MSME sector today is not just a backbone of domestic growth but also a critical driver of exports, technology adoption, digital transformation, and women entrepreneurship. The sector continues to receive policy support, credit infusion, and innovation backing, positioning it as a powerful engine for India’s economic future.

The Department of Animal Husbandry & Dairying (DAHD) under the Ministry of Fisheries, Animal Husbandry and Dairying announced the launch of a new credit guarantee scheme. The scheme under the Animal Husbandry Infrastructure Development Fund (AHIDF) aims to facilitate collateral-free credit for MSMEs in the livestock sector.

India’s MSME sector is poised for sustained growth, backed by robust policy reforms, digital integration, and expanding access to finance. With rising exports, increased participation of women entrepreneurs, and stronger global partnerships, MSMEs are set to play a pivotal role in driving inclusive, innovation-led, and self-reliant economic development.