SIDBI releases Report titled-
‘Understanding Indian MSME Sector: Progress and
Challenges’
13th
May, 2025 – SIDBI has
released a report titled ‘Understanding the Indian MSME Sector: Progress, and Challenges’.
The report provides comprehensive insights into the rapidly growing MSME sector
in India, based on both primary and secondary research. It includes industry,
gender, and regional-level analyses, drawn from a primary survey of more than
2,000 MSMEs across 19 industries. The survey offers a deeper understanding of
ground-level trends in the MSME sector and highlights the sector's growth,
challenges, and opportunities. In particular, the report provides insights into
women entrepreneurship and sustainability initiatives, aligning with the
Government’s focus on these areas. The study also offers an estimate of the
credit gap in the MSME sector.
The key
findings of the study are mentioned below:
- Formalization Drive: The MSME sector, especially micro and small enterprises, has seen significant formalization through Udyam Registration and Udyam Assist Portal, with over 6.2 crore registrations by March 2025 (up from 2.5 crore in March 2024).
- Access to Credit: The
survey respondents consider timely and adequate credit access as one of
their key challenges despite the comprehensive policy initiatives in that
regard. While borrowings from informal sources are minimal for small and
medium enterprises at 3% and 2% respectively, it is still relatively
significant at 12% for micro enterprises.
- Digital Lending Opportunity: With 18% of MSMEs using digital lending
platforms and 90% accepting digital payments, the sector shows promising
digital adoption. This trend, supported by platforms like UPI, can enhance
credit access going forward.
- Credit Gap:
Increased credit supply to MSMEs is in evidence. The study broadly
estimates that the sector still has an addressable credit gap of about 24%
or ₹30 lakh crore. The gap is higher in the services sector at 27%; it is
estimated to be also higher at 35% for women owned MSMEs, indicating a
need for targeted policy actions.
- Women Entrepreneurship: Women entrepreneurship has become a
significant aspect in the MSME sector with 26.2% in proprietary enterprises
being owned by women as per ASUSE 2023-24, signalling growing inclusivity.
76% of the women led MSME respondents have access to credit, but they
continue to face higher challenges vis-Ã -vis their male counterparts with
41% highlighting credit access and high competition as the largest
obstacle to their growth.
- Market Access Challenges: According to the survey, a majority of the
MSMEs have been slow to adopt modern channels to reach customers. Around
70% of the survey respondents continue to use traditional modes of
marketing which hinders their scalability and ability to remain
competitive. Effective utilization of e-commerce and digital marketing can
provide MSMEs with improved access to new markets and customers.
- Export Potential: MSMEs
increased their merchandise export share from 43.6% (FY23) to 45.7%
(FY24). Exporting MSMEs show better tech adoption than non-exporters, but
cite supply chain issues, credit access, and competition as major hurdles,
though they.
- Skilled Labour Shortage: Around a fourth of the surveyed MSMEs cite
the lack of skilled manpower as one of their major challenges. Skilled
labour shortages are particularly high in defence equipment, readymade
garments, hotel sectors, tiles and sanitaryware as reflected in the survey.
- Infrastructure & Technology Gaps: Inadequate infrastructure and technology
adoption affect productivity and competitiveness; more prominent in
sectors like auto components, iron and steel and transport and logistics.
A significant proportion of the respondents cited technology adoption as a
major obstacle to their growth.
- Sustainability Efforts: Over one-third of MSMEs have adopted
sustainable practices; 31% use energy-efficient systems, and 21% utilize
renewable energy. However, 33% cite limited awareness as a key barrier to
further adoption.
The
report is available at https://www.sidbi.in/uploads/Understanding_Indian_MSME_sector_Progress_and_Challenges_13_05_25_Final.pdf
About
Small Industries Development Bank of India (SIDBI):
Since its
formation in 1990, SIDBI has been touching the lives of citizens across various
strata of society through its integrated, innovative and inclusive approach.
SIDBI has directly or indirectly impacted the lives of Micro, Small and Medium
Enterprises (MSMEs) through various credit and developmental measures whether
they are traditional, domestic small entrepreneurs, bottom-of-the-pyramid
entrepreneurs, or high-end knowledge-based entrepreneurs.
