A study conducted by ASSOCHAM in partnership with Egrow Foundation has revealed that micro, small, and medium enterprises (MSMEs) in India continue to face significant challenges in complying with regulations, securing business registrations, obtaining credit, and accessing markets.
The report, titled “MSMEs Facing Challenges in Doing Business,” emphasizes the need for innovative banking solutions to ensure transparency in loan approvals and reduce borrowing costs for MSMEs.
Key Findings and Recommendations
1. Financial Access: The study proposes the introduction of MSME-specific bonds and mutual funds to enhance credit availability.
2. The expansion of small finance banks (SFBs) is recommended to support informal micro-enterprises, particularly in rural and semi-urban areas, where access to financial resources remains limited.
3. Taxation and Compliance – Simplification of the Goods and Services Tax (GST) and a reduction in corporate income tax rates for MSMEs, from 25% to 15%, are suggested to ease compliance burdens.
A gap in coordination between state and central governments has been identified as a barrier to the effective implementation of MSME-focused government schemes. The report calls for better synergy to ensure these initiatives achieve their intended impact.
The report underscores the importance of formalizing micro and small enterprises to help India meet its developmental aspirations. Formalization is seen as a key driver for achieving the country’s Viksit Bharat (Developed India) vision by 2047.
The study highlights that MSMEs are a critical component of India’s economy, and their empowerment is essential for the nation to transition into a developed economy by 2047. ASSOCHAM’s president noted that the strategic recommendations outlined in the report could guide policymakers in making informed decisions to strengthen the MSME sector.
By fostering innovation in financing, simplifying regulations, and formalizing enterprises, the study envisions a robust roadmap for MSMEs to unlock their full potential, contributing significantly to India’s economic growth and global competitiveness.