Nagpur’s industrial push gains momentum, but MSMEs face rising power costs and land hurdles

Nagpur and the wider Vidarbha region are emerging as promising industrial investment destinations, with major projects in steel, solar manufacturing, and automobiles expected to create fresh opportunities for micro, small, and medium enterprises (MSMEs) in the region. However, rising industrial electricity tariffs, difficulties in accessing land, and gaps in policy support continue to weigh on smaller businesses, raising questions about the region’s ability to translate large investments into broad-based industrial growth.

Despite all these challenges, industry representatives remain optimistic about Nagpur's industrial prospects, citing substantial investments by large companies and the potential development of a stronger ancillary manufacturing ecosystem.

Julfesh Shah, Chairman of the Chamber of Small Industry Associations (COSIA), Vidarbha Chapter, says the region is witnessing growing interest from major industrial groups across multiple sectors. “If we look at Vidarbha as a whole, with Nagpur as its principal industrial centre, the region is witnessing significant interest from large industrial groups. Several mega projects have been proposed or announced across different sectors, which could substantially transform the industrial landscape and create new opportunities for MSMEs,” Shah adds.


He points to Gadchiroli’s emergence as a steel manufacturing hub, with companies, including Jindal, JSW, and Lloyds, investing or planning facilities in the district. Lloyd Metals and Lloyds Steel are already operational, while three to four additional large steel units could become operational over the next two to three years, he says.

Nagpur’s Butibori industrial area is also attracting investments in solar manufacturing from companies such as Avaada, Waaree, and Jupiter. Meanwhile, Mahindra’s proposed investment of Rs 7,500 crore in a utility vehicle manufacturing facility is expected to strengthen the region’s automobile ecosystem, believes Shah.

“A single large or ultra-mega manufacturing unit can support around 100 to 150 ancillary units. This will directly contribute to the growth of MSMEs and encourage the establishment of new small and medium enterprises,” Shah says.

On financing, Shah maintains that banks are willing to lend to viable businesses with credible promoters and sound proposals. He also highlights collateral-free lending opportunities under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMS).

Notably, Maharashtra has more than 10.1 million registered MSMEs (as of February 28, 2026), according to the government data. The Vidarbha region, comprising 11 districts, also houses 1.34 million Udyam-registered MSMEs (as of December 2025).

However, Maharashtra reported 28,764 MSME closures between FY24 and FY26, the highest among all states, as per data tabled in the Rajya Sabha by Union MSME Minister Jitan Ram Manjhi. During the same period, the state recorded 75,57,276 new MSME registrations, retaining its position as the country’s leading state in terms of registrations.

Industry representatives flag some structural bottlenecks for the closure of MSMEs.

Rajib Chakraborty, Founder of Ishita International and the National President of Soluble Fertilizer Industry Association (SFIA), says high electricity tariffs and difficulties in industrial land allotment were undermining competitiveness. “While power availability is adequate, electricity tariffs remain among the highest in the country, significantly increasing the cost of doing business and undermining industrial competitiveness,” Chakraborty adds.

He also questions the effectiveness of existing land allocation policies for smaller enterprises.

“Policy commitments to preferential allotment for MSMEs and the promotion of import substitution appear to remain largely on paper, with little tangible benefit reaching the intended beneficiaries,” he says, adding that the online land allotment mechanism needed greater transparency and accountability.

Suhas Buddhe, former Vice-President and Secretary of the Vidarbha Industries Association (VIA), calls for easier availability of industrial land through the Maharashtra Industrial Development Corporation (MIDC) and competitive electricity tariffs.

He suggests bringing industrial power costs down to Rs 5-6 per unit from the prevailing Rs 10 or more per unit.

Buddhe also advocates special incentives for investors setting up operations in Nagpur and additional support for export-oriented units in the region’s Special Economic Zone (SEZ).

Since exports do not qualify for certain state GST-linked incentives, he suggests introducing dedicated export, transportation and electricity incentives to make manufacturing units more competitive in international markets.

New age businesses: A ray of hope

Beyond traditional manufacturing, entrepreneurs believe Nagpur must develop a stronger ecosystem for technology-driven enterprises to sustain industrial growth.

Trishala Bothra, Co-Founder of online wellness and habit-building platform Habuild, says Nagpur's established manufacturing and logistics strengths could provide a foundation for technology, artificial intelligence and digital businesses.

“We have seen how a digital business can be built from Nagpur and serve people across India. However, scaling new-age businesses requires access to skilled talent, mentorship, capital and industry networks,” Bothra adds.

She calls for simpler compliance requirements, better start-up funding, cash-flow-based lending for digital businesses, and stronger collaboration between educational institutions and industry.

“Digital businesses can serve national and global markets without moving their operations to a metro, provided they have the right talent, technology, and ecosystem support,” she says.

With major industrial investments taking shape across Vidarbha, industry stakeholders believe Nagpur has an opportunity to emerge as a diversified manufacturing and technology centre. However, translating investment announcements into sustained MSME growth will depend on addressing longstanding concerns over land, power costs, financing and export competitiveness.