S. Ahmad
“Credit alone cannot build globally competitive enterprises. MSMEs require patient capital—equity that allows them to invest, innovate, and scale. The Self Reliant India Fund bridges this gap, making growth, not survival, the goal.”
India’s economic resurgence is often narrated through large highways, bullet trains, semiconductor fabs, and foreign investment figures that dominate headlines. These symbols of growth are important, but they tell only a partial story. Beneath this visible layer of big-ticket development lies a quieter, more dispersed, and far more people-centric engine of economic transformation—the Micro, Small and Medium Enterprises (MSME) sector. In 2025, this sector did not merely benefit from policy attention; it was systematically repositioned as the backbone of India’s long-term growth strategy.
The Micro, Small, and Medium Enterprises (MSME) sector plays a crucial role in India’s economic and social development. It generates significant employment at low capital cost, supports large industries as ancillary units, and promotes industrialization in rural and backward areas—helping to reduce regional imbalances and ensure more equitable income distribution. The Ministry of MSME, Government of India, in collaboration with its various organizations & institutes has pioneered initiatives that promote growth and development of the MSME sector, including Khadi, Village and Coir industries. A range of schemes are being implemented, providing credit support, technological assistance, infrastructure development, skill development and training, as well as measures to enhance the competitiveness and market access of MSMEs.
For decades, MSMEs were acknowledged rhetorically as job creators but treated administratively as an afterthought. Policies arrived in silos—credit without markets, skills without finance, subsidies without sustainability. The year 2025 marked a departure from this fragmented approach. What unfolded instead was a deliberate attempt to construct an MSME ecosystem at scale, where formalisation, finance, infrastructure, technology, market access, governance, and social inclusion were aligned into a single policy framework.
This shift matters because MSMEs are not marginal players in India’s economy. They employ over 11 crore people, contribute nearly 30 per cent to GDP, and account for around 45 per cent of exports. More importantly, MSMEs are deeply embedded in India’s social and regional fabric. They operate in small towns, villages, border areas, tribal belts, and backward regions where large industries rarely venture. Strengthening MSMEs, therefore, is not just an economic imperative—it is a social and political necessity.
One of the most consequential developments of 2025 was the accelerated formalisation of MSMEs. Historically, a large share of India’s small enterprises operated outside formal systems. This informality was not always a choice; it was often the result of complex procedures, fear of taxation, lack of awareness, and exclusion from institutional finance.
The Udyam Registration Portal and the Udyam Assist Platform together crossed 7.3 crore registrations by mid-December 2025, with 4.37 crore enterprises registered on Udyam and 2.92 crore on UAP. This figure represents one of the largest formalisation drives anywhere in the world. But beyond the numbers lies a deeper transformation. Formal registration opens doors—to bank credit, government procurement, insurance, pension schemes, and legal recognition.
By bringing millions of micro enterprises into the formal fold, the government altered the relationship between the state and the smallest economic actors. These enterprises are no longer invisible. They can now be counted, mapped, supported, and protected.
This push was further strengthened by the revision of MSME classification thresholds, effective April 1, 2025. By increasing investment limits by 2.5 times and turnover limits by 2 times, the government addressed a long-standing psychological barrier faced by entrepreneurs—the fear of growth. Earlier, many businesses deliberately avoided expansion to retain MSME benefits. The revised thresholds sent a clear signal: growth will not be punished; it will be supported.
Credit has always been the Achilles’ heel of India’s MSME sector. Banks viewed small enterprises as risky, collateral-poor, and administratively expensive. Informal lenders filled the gap, often at exploitative interest rates. The policy interventions of 2025 sought to break this cycle structurally.
The Credit Guarantee Scheme for Micro and Small Enterprises, completing 25 years, crossed one crore guarantees since inception. In 2025 alone, over 29 lakh guarantees worth ₹3.77 lakh crore were approved. This scale is significant because credit guarantees reduce the risk borne by banks, encouraging them to lend without demanding excessive collateral.
The decision to enhance the guarantee cover from ₹5 crore to ₹10 crore reflected a strategic shift—from merely sustaining micro units to enabling ambitious, growth-oriented MSMEs. Rationalisation of guarantee fees further reduced borrowing costs, making formal credit more attractive.
A particularly progressive step was the introduction of preferential terms for transgender entrepreneurs. This intervention acknowledged that financial exclusion is not only economic but also social. By embedding inclusion into financial design, the MSME framework moved beyond symbolism into actionable equity.
While large policy instruments shape the ecosystem, grassroots entrepreneurship determines whether growth reaches ordinary citizens. The Prime Minister’s Employment Generation Programme (PMEGP) continued to play a crucial role in this respect.
Since its inception, PMEGP has supported over 10.7 lakh enterprises and generated employment for more than 87 lakh people. In 2025 alone, over 84,000 enterprises were assisted, creating livelihoods for nearly 6.7 lakh individuals.
One reform deserves special attention: the acceptance of PMEGP applications in 19 regional languages since June 2025. Language is often an invisible barrier that excludes rural, tribal, and semi-urban entrepreneurs. By dismantling this barrier, the programme became more accessible, inclusive, and representative of India’s diversity.
Debt alone cannot build globally competitive enterprises. MSMEs require patient capital—equity that allows them to invest, innovate, and scale. The Self Reliant India (SRI) Fund was designed to address this long-neglected gap.
With 69 daughter funds empanelled and investments of ₹1,823 crore benefiting 682 MSMEs since inception, the SRI Fund emerged as a crucial bridge between startups and traditional MSMEs. In 2025, over ₹613 crore was invested in 129 enterprises, reinforcing the idea that MSMEs deserve growth capital, not just survival loans.
Infrastructure is not limited to roads and ports. For MSMEs, infrastructure means toolkits, common facilities, training centres, and digital access. The PM Vishwakarma Scheme emerged as a defining intervention in this space.
By achieving 30 lakh registrations within two years, the scheme validated the economic relevance of artisans and craftspeople. In 2025, 7.7 lakh beneficiaries received skill training, ₹2,257 crore in credit was sanctioned, 6.7 lakh artisans were digitally enabled, and 10.5 lakh modern toolkits were distributed.
This was not welfare; it was economic modernisation. Traditional skills were integrated into contemporary value chains, making heritage livelihoods viable in a modern market economy.
The World Bank–supported RAMP scheme complemented this effort by approving nearly 400 state-level proposals worth ₹3,211 crore, impacting over 10 lakh MSMEs. This decentralised approach allowed states to respond to local needs while aligning with national priorities.
India’s development challenge has always been spatial. Growth concentrated in a few urban clusters while vast regions remained underdeveloped. The MSME strategy of 2025 addressed this imbalance directly.
Focused interventions in the North Eastern Region and Sikkim supported MSMEs through technology centres, industrial infrastructure, and tourism-linked projects. The approval of eight new projects in Assam and Meghalaya during 2025 reflected a conscious attempt to integrate historically marginalised regions into the national economy.
Production without markets leads to stagnation. Recognising this, the government strengthened procurement reforms. Central government entities exceeded the mandated 25 per cent procurement from MSEs, sourcing over 43 per cent of their requirements from small enterprises in value terms.
The National SC-ST Hub delivered one of the most striking outcomes, driving a 37-fold increase in procurement from SC/ST-owned MSEs over a decade. Women entrepreneurs also gained visibility through targeted procurement drives, transforming inclusion into measurable economic participation.
Competitiveness in the modern economy demands technology adoption. Under the MSME Champion Scheme, enterprises were integrated into ZED, LEAN, and innovation frameworks. The MSME Hackathon 5.0, which received over 52,000 ideas, revealed the depth of grassroots innovation across India.
Technology Centres and Extension Centres expanded rapidly, training thousands of youth and supporting MSMEs in advanced manufacturing processes.
Digital governance reforms tied the ecosystem together. The Performance Smartboard and integration with the PM Gati Shakti National Master Plan enabled data-driven policymaking. With nearly one lakh MSME assets geo-mapped, planning became precise rather than reactive.
Grievance redressal through the CHAMPIONS portal, achieving a 99.38 per cent resolution rate, reinforced institutional trust—an often overlooked but critical component of economic governance.
Traditional sectors were not sidelined in this modernisation drive. Khadi and Village Industries crossed ₹1.27 lakh crore in sales, while coir exports exceeded ₹5,260 crore. Wage increases, eco-friendly innovation, and global promotion demonstrated that sustainability and competitiveness can coexist.
India’s MSME strategy extended beyond borders in 2025. MoUs with Mauritius, Thailand, Slovakia, and Malaysia, along with engagement with Japan and Taiwan, positioned MSMEs as tools of economic diplomacy. Small enterprises became vehicles of international cooperation rather than passive beneficiaries of trade agreements.
Taken together, the MSME record of 2025 reflects a quiet but profound shift. This was not about launching more schemes; it was about constructing an ecosystem. By aligning finance, skills, infrastructure, technology, inclusion, governance, and markets, MSMEs were invited not merely to survive India’s growth story, but to shape it.
In an era dominated by megaprojects and spectacle-driven economics, this patient, granular work may well prove to be India’s most durable investment—one that touches lives, stabilises regions, and anchors growth in the everyday aspirations of ordinary citizens.
The article is based on the inputs and background information provided by the Press Information Bureau (PIB) Author is Writer, Policy Commentator. He can be mailed at kcprmijk@gmail.com
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