msme for 16 December 2025

Micro, Small, and Medium Enterprises (MSMEs) form the backbone of India’s economy, contributing significantly to employment, production, and exports. They play a key role in promoting entrepreneurship and supporting local industries across urban and rural areas. MSMEs foster innovation, create livelihood opportunities, and help in reducing regional economic disparities. Recognizing their importance, the government has introduced various initiatives to support and strengthen this sector.

What is MSME?

MSME stands for Micro, Small, and Medium Enterprises. In India, it is a formal classification of businesses based on their investment in plant, machinery or equipment and their annual turnover, as defined under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. 

The objective of this classification is to provide targeted policy support, regulation, and incentives to smaller businesses so that they can grow in a structured and sustainable manner.

Classification of MSME Sector

To enable MSMEs to expand their operations and gain access to improved financial and institutional support, the classification limits for investment have been raised by 2.5 times, while turnover limits have been increased by 2 times.

Classification of MSME Sector
Rs. in Crore	Investment (₹ in crore)		Turnover (₹ in crore)
	Current	Revised	Current	Revised
Micro Enterprises	1	2.5	5	10
Small Enterprises	10	25	50	100
Medium Enterprises	50	125	250	500

Micro, Small and Medium Enterprises (MSME) Objectives

• To promote entrepreneurship and self-employment by enabling individuals to start and grow small businesses with limited capital.
• To generate large-scale employment opportunities, especially in rural and semi-urban areas, at a lower cost of investment.
• To ensure inclusive and balanced regional development by spreading industrial growth beyond major urban centres.
• To strengthen the manufacturing and service sectors through diversified production and flexible business models.
• To encourage innovation, skill development, and technology adoption among small enterprises.
• To enhance contribution to GDP, exports, and value addition, improving overall economic growth.
• To support women, youth, and marginalized entrepreneurs through financial assistance, training, and policy incentives.

Contribution of MSMEs to GDP and Exports

MSMEs play an important role in strengthening India’s economy by supporting production, services, and overall economic activity. They help maintain economic stability by encouraging entrepreneurship, innovation, and balanced regional development. 

Contribution of MSMEs to GDP

• MSMEs contribute 30.1% to India’s GDP (2022-23), making them a key pillar of the economy.
• They account for nearly 35.4% of the total manufacturing output, supporting large industries with raw materials and components.
• MSMEs help maintain economic stability due to their wide spread across sectors and regions.
• The sector has shown strong resilience during economic crises, such as the COVID-19 pandemic, by continuing production and employment.
• MSMEs support inclusive growth by promoting industrial activity in rural and semi-urban areas.

Contribution of MSMEs to Export

• MSMEs contribute to 45.79% (2024-25) of India’s total exports, including goods and services.
• They export a wide range of products such as textiles, engineering goods, pharmaceuticals, leather items, handicrafts, and food products.
• Medium enterprises, though fewer in number, contribute nearly 40% of MSME exports due to better technology and scale.
• MSMEs help diversify India’s export basket and reduce dependence on a few large exporters.
• Their participation in global markets strengthens foreign exchange earnings and trade competitiveness.

Government Initiatives to Boost MSME Sector

The Government of India has implemented multiple strategic initiatives to strengthen the Micro, Small, and Medium Enterprises (MSME) sector, recognizing its critical role in employment generation, entrepreneurship promotion, and economic growth. The initiatives led by government includes:

1. PM Vishwakarma Scheme

• Objective: To enhance the quality, market reach, and socio-economic status of artisans and craftspeople (“Vishwakarmas”) by integrating them into domestic and international value chains.
• Launch & Funding: Announced in the 2023-24 Union Budget and launched in  September 2023, fully funded by the Government of India with an initial allocation of ₹13,000 crore for 2023-24 to 2027-28.
• Features:
  • Provides artisans with basic skill training through a 5-day program.
  • Offers collateral-free credit for those opting for financial support.
  • Focuses on empowering artisans economically and improving their standard of living.

2. Udyam Registration Portal

• Objective: To formalize enterprises across India, replacing the earlier Udyog Aadhaar Memorandum and Entrepreneurship Memorandum-II, thereby enabling easier access to government benefits.
• Launch: July 2020.
• Features:
  • Free, paperless, self-declaration-based registration process.
  • No document upload required, simplifying formalization for micro, small, and medium enterprises.
  • Integration with the Udyam Assist Platform (launched in November 2023) to bring informal micro-enterprises under the formal economy.
• Impact:
  • Total MSMEs registered: 5,93,38,604 (majority micro-enterprises).
  • Employment generated: 25.18 crore individuals, highlighting the sector’s critical role in job creation.
• Additional Benefits: Access to Priority Sector Lending and other government schemes.

3. Prime Minister’s Employment Generation Programme (PMEGP)

• Objective: A credit-linked subsidy scheme promoting employment through establishment of micro-enterprises in the non-farm sector.
• Project Limits:
  • Manufacturing sector: Max project cost ₹50 lakh.
  • Service sector: Max project cost ₹20 lakh.
• Subsidy Structure:
  • Special Categories (SC, ST, OBC, Women, Minorities, Ex-Servicemen, Transgenders, Differently-abled, NER, Aspirational Districts, Hill & Border areas):
    • 25% in urban areas, 35% in rural areas.
  • General Category:
    • 15% in urban areas, 25% in rural areas.
• Additional Support:
  • Free 2-day Entrepreneurship Development Programme (EDP) for prospective entrepreneurs.
  • Geo-tagging of units to facilitate market linkages.
• Achievements (2023-24):
  • 89,118 enterprises supported.
  • Margin money subsidy disbursed: ₹3,093.87 crore.
  • Employment generated: 7,12,944 opportunities.

4. Scheme of Fund for Regeneration of Traditional Industries (SFURTI)

• Objective: To organize traditional artisans into clusters for better product development, value addition, and market access, thereby increasing sustainable income.
• Launch & Revamp: Introduced in 2005-06, revamped in 2014-15 to improve efficiency and outreach.
• Features:
  • Formation of artisan clusters for collective growth.
  • Promotes product diversification and competitiveness.
  • Facilitates employment creation for artisans.
• Achievements:
  • 513 clusters approved, 376 functional.
  • Grants extended: ₹1,336 crore.
  • Employment generated: 2,20,800 artisans.

5. Public Procurement Policy for Micro and Small Enterprises

• Objective: To ensure preferential access for MSEs in government procurement, boosting their market presence.
• Launch: 2012 by the Ministry of MSME.
• Policy Highlights:
  • 25% of annual procurement by Central Ministries, Departments, and CPSEs must be sourced from MSEs.
  • Reservation within 25%:
    • 4% for SC/ST-owned MSEs.
    • 3% for women-owned MSEs.
  • 358 items exclusively reserved for procurement from MSEs, promoting sector-specific growth.

MSME and Women Empowerment

The MSME sector is a cornerstone for women’s empowerment, enabling entrepreneurship, financial independence, and skill development. Various government initiatives actively support women-led enterprises.

PMEGP (Prime Minister’s Employment Generation Programme):

• Women entrepreneurs under PMEGP are included in the Special Category, receiving higher margin money subsidies: 35% in rural areas and 25% in urban areas.
• Supports women in establishing micro-enterprises in manufacturing and service sectors, promoting self-employment.

Public Procurement Policy for MSEs:

• 3% of total government procurement is reserved for women-owned MSMEs.
• Encourages participation of women entrepreneurs in supply chains of Central Ministries, Departments, and CPSEs.

PM Vishwakarma Scheme:

• Provides skill development, basic training, and collateral-free credit to women artisans.
• Aims to integrate women artisans into domestic and international markets, improving income and socio-economic status.

SFURTI (Scheme of Fund for Regeneration of Traditional Industries):

• Promotes formation of clusters where women artisans gain access to resources, skill development, and collective market opportunities.
• Supports income generation for women through traditional and handicraft industries.

Financial Inclusion & Credit Access:

• Integration with Stand Up India, PMJDY, MUDRA loans, and other MSME finance schemes ensures women have easier access to collateral-free loans and credit support.

Skill Development & Entrepreneurship Training:

• Government programs provide Entrepreneurship Development Programs (EDP), workshops, and training specifically targeting women to enhance managerial and technical skills.

Market Linkages & Expo Opportunities:

• Women-led enterprises are supported through government-organized exhibitions, e-commerce platforms, and international trade fairs, increasing visibility and sales opportunities.

Employment Generation:

• Women entrepreneurs in MSMEs create both self-employment and employment opportunities for others, contributing to rural and urban economic growth.

Challenges Faced by MSMEs in India

• Limited access to finance due to inadequate collateral or insufficient credit history.
• Delays in payments from clients, including government departments and large corporations, impacting cash flow.
• Low adoption of modern technology and digital tools, affecting productivity and competitiveness.
• Shortage of skilled manpower and limited access to vocational training programs.
• Intense competition from large enterprises and imported goods, particularly in traditional sectors.
• Restricted market access, making it difficult for MSMEs to reach national and international customers.
• Limited awareness of government schemes and support programs designed to facilitate growth and development.

Way Forward

• Improving Access to Finance: Strengthen collateral-free loans and credit guarantee schemes. For example, MUDRA loans and PMEGP subsidies help small enterprises secure funding.
• Timely Payment Mechanisms: Implement stricter enforcement of payment timelines under the MSME Development Act to ensure prompt payments from buyers and government departments.
• Technology Upgradation: Encourage adoption of modern machinery, digital tools, and e-commerce platforms. Schemes like Technology Upgradation Fund Scheme (TUFS) for MSMEs can enhance efficiency and competitiveness.
• Skill Development and Training: Expand vocational training and entrepreneurship programs. For instance, PM Vishwakarma Scheme provides skill development and capacity-building for artisans.
• Market Access and Promotion: Facilitate participation in trade fairs, exhibitions, and e-commerce portals. The SFURTI scheme clusters artisans, helping them access domestic and international markets.
• Policy Awareness and Outreach: Increase awareness about government schemes and benefits through campaigns, workshops, and digital platforms like the Udyam Registration Portal.
• Sustainability and Innovation Support: Promote eco-friendly practices and research-driven innovations. Incentives for green manufacturing units and grants for R&D under MSME innovation programs.