Representative image of MSME sector.
Credit: Reuters File Photo
The Self-Reliant India (SRI) Fund, launched to infuse Rs 50,000 crore as equity funding in micro, small, and medium enterprises (MSMEs), has assisted 682 MSMEs by way of investment worth Rs 15,442 crore, as of November 30, 2025.
Additionally, the Prime Minister’s Employment Generation Programme (PMEGP) assists micro-entrepreneurs by providing margin money subsidies on bank loans.
According to the Economic Survey 2025-26, tabled in the parliament by Finance Minister Nirmala Sitharaman, the programme has been expanded to include project costs and an enhanced scope of activities. Operational challenges such as delayed payments affect liquidity, especially for micro-suppliers.
With a view to address these challenges, the government has made some interventions which include expanding TReDS (Trade Receivables Discounting System) ecosystem and digital invoicing with a reduced monetary limit for onboarding on TReDS for Corporates and CPSEs from Rs 500 crore to a turnover of Rs 250 crore.
Micro, Small, and Medium Enterprises (MSMEs) form the backbone of India’s industrial economy, accounting for approximately 35.4 per cent of manufacturing, around 48.58 per cent of exports, and 31.1 per cent of GDP in the country.
With over 7.47 crore enterprises employing over 32.82 crore persons, the sector holds its position as the second-largest employer after agriculture. Globally, MSMEs make up about 90% of businesses and are responsible for over 50 per cent of the total global employment.
With India’s manufacturing sector positioned for greater global integration, MSME sector’s role is critical in enabling effective supply-chain participation, fostering local value addition, and supporting inclusive regional growth, the Survey said.
Despite expanding credit footprints and rising digital integration, access to formal credit remains a binding constraint for many micro-enterprises due to limited collateral and documentation readiness, as is generally the case worldwide.
This challenge was also highlighted in the World Bank’s Financial Sector Assessment Report for India (2025), which noted that 27 per cent of MSMEs identify finance as their biggest obstacle.
Women-owned MSMEs, in particular, account for a small fraction of commercial credit, though formalisation under Udyam and targeted credit guidelines are gradually addressing this gap. Furthermore, MSME credit has maintained a positive trajectory in recent times, bolstered by several government interventions aimed at enhancing credit flow to the sector, the Survey added.