NITI Aayog lays out a roadmap to boost competitiveness of MSMEs

NITI Aayog has proposed systemic reforms in financing, skilling, innovation and market access to micro, small and medium enterprises (MSMEs) in the country as part of the roadmap to enhance the competitiveness of India’s MSMEs.

“While MSMEs have gained better access to loans, a significant credit gap still exists in the sector,” the Aayog said in its report on ‘Enhancing MSMEs Competitiveness in India’. The report, jointly prepared by NITI Aayog and the Institute for Competitiveness (IFC), was released on Friday.

“To address this issue, there is a need to reform the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) by enhancing regulatory oversight and further reducing risk premiums for borrowers seeking CGTMSE funding,” it proposed.


The report further said that SIDBI needs to play a significant role in helping NBFCs improve their capacity and governance structures to scale up operations.

Besides, it has recommended lowering of eligibility barriers for schemes that offer subsidies for capital and interest on loans at the state level to better address the financing needs of MSMEs throughout their lifecycle.

MSMEs contribute to 30.1% of India’s gross value added in 2020-21 while exports stood at Rs 12.39 lakh crore in 2024-25 with the number of export units pegged at 1,73,350.

Highlighting the ‘missing middle’ problem, the report calls for a comprehensive policy framework that can help enterprises to grow organically in size and harness economies of scale in production.

Besides, it has called for streamlining income tax procedures to foster a more equitable and effective policy framework to help MSMEs become formal enterprises.

According to the report, the manpower needs of MSMEs in India demand significant investments in STEM (science, technology, engineering and mathematics) education.

“To meet the requirements of a rapidly evolving job market, training programs must be aligned with current industry needs and provide last-mile connectivity, particularly for micro-enterprises located in rural areas,” it said, adding it is crucial to address the existing skills gap by reforming formal vocational education and technical training.

“To expand and enhance existing training initiatives, more states should offer partial subsidies for employment training and skill development initiatives must be made easily accessible, especially for MSMEs that face challenges due to their location or size,” it said.

“Indian MSMEs need to strengthen supply chain linkages with additional requirements of affordable digital risk management solutions to track supply chains, monitor inventory, and manage logistics in real time,” it added.

As per the report, tailored policies are necessary to support the technological upgrading of micro and small enterprises, addressing their basic technology needs and enhancing their productive capacity.

“Furthermore, states should develop MSME-specific infrastructure, such as co-working spaces, industrial parks, and shared facilities to enhance scale and competitiveness,” it added.