India’s small businesses are facing new challenges, including the US imposing 50% tariffs. In this environment, Chief Economic Advisor (CEA) V. Anantha Nageswaran has urged Micro, Small and Medium Enterprises (MSMEs) to embrace a stronger culture of innovation, competitiveness, and quality to break into new markets.
Speaking at the launch of a new report on MSMEs’ access to finance and timely payments—released jointly by FISME, the Global Alliance for Mass Entrepreneurship, and C2FO—Nageswaran highlighted the need for MSMEs to enhance their ambition and push beyond traditional limitations.
MSMEs Must Strengthen Ambition, Says CEA
Nageswaran noted that while some MSMEs are comfortable operating at their current scale, it becomes a concern when a lack of ambition stems from systemic challenges.
“If we remove the underlying hurdles, perhaps the ambition will rise. Some of it may simply be acceptance of difficult operating conditions,” he said.
He stressed that the ecosystem should not only treat MSMEs on par with larger suppliers but also support them in building innovation-led competitiveness.
Delayed Payments Improve, but Credit Gap Remains Huge
The report revealed that delayed payments to MSMEs dropped by 7%, reaching ₹8.14 lakh crore in FY24, down from ₹10.76 lakh crore in FY22.
However, MSMEs continue to struggle with limited access to formal credit.
- Unmet credit demand: ₹25 lakh crore
- Bank loans outstanding to MSMEs (as of Sept 19): ₹12.99 lakh crore (20% YoY growth)
Low credit access and payment delays remain core barriers to MSME growth.
Government Reforms Exist, But Implementation Is Weak
The report acknowledged several government interventions aimed at improving liquidity for MSMEs:
- TReDS (Trade Receivables Discounting System)
- Section 43B(h) of the Income Tax Act (mandates timely MSME payments)
- MSME-1 disclosure form (for payments exceeding 45 days)
- Samadhaan portal (for delayed payment complaints)
While these tools are helpful, weak enforcement, low adoption, and institutional bottlenecks reduce their effectiveness.
Credit schemes like Priority Sector Lending and Mudra loans have expanded coverage but still fall short due to rigid banking norms, information asymmetry, and stringent SMA/NPA classifications.
The Road Ahead
To build globally competitive MSMEs, India must ensure:
- Stronger enforcement of payment norms
- Wider and easier access to credit
- Removal of structural hurdles
- A mindset shift towards innovation and ambition
As Nageswaran emphasized, building a thriving MSME ecosystem requires both policy support and a renewed commitment to quality-driven growth.