As the Union Budget 2025-26 draws closer, all eyes are on the micro, small, and medium enterprise (MSME) sector—India’s economic powerhouse. Despite its substantial contribution to GDP and employment, systemic challenges continue to stifle the sector’s growth and potential.
One of the primary hurdles is the lack of formalisation, with a significant portion of MSMEs remaining unincorporated and outside the formal non-agricultural economy. This excludes them from accessing government support schemes and growth opportunities. Additionally, credit access remains a persistent issue. High borrowing costs, limited credit history, lack of collateral, and constrained debt-servicing capacity create significant barriers for these businesses, particularly in managing working capital and scaling operations.
Branding and marketing are other areas of concern. Due to limited visibility and weak marketing capabilities, MSMEs struggle to establish strong brands and reach wider consumer bases. Furthermore, the high costs of R&D, product design, and technology acquisition make it challenging for these enterprises to diversify and modernize their product portfolios, hampering their global competitiveness.
To address these challenges, experts and industry stakeholders have proposed a series of measures for the upcoming budget. Expanding access to affordable loans, including interest rates below the current threshold of 10%, is seen as critical. Stakeholders also suggest leveraging socially responsible investment funds to attract private equity and foreign expertise.
Capacity building is another key recommendation, with calls for training programs, global B2B platforms, and export acceleration centers at sectoral or district levels. Enhancing infrastructure through programs like RAMP (Raising and Accelerating MSME Performance) and aligning it with the National Industrial Corridor Development Program could foster the creation of MSME growth hubs.
Lastly, supporting technology adoption and R&D efforts will enable MSMEs to diversify their offerings and maintain competitiveness in global markets.
As the government prepares to unveil its budget, MSME stakeholders are optimistic about the prospect of targeted interventions that could bolster the sector and solidify its role as a cornerstone of India’s economic growth.