Small Industries Development Bank of India (SIDBI) has released a report titled ‘Understanding the Indian MSME Sector: Progress, and Challenges’ which report provides insights into the Indian Micro, Small and Medium Enterprises (MSME) sector based on a survey of 2,097 MSMEs across 19 sectors in manufacturing, services, and trading.
- The number of registrations Udyam Registration Portal (URP) have surged to over 6.2 crore by March 2025, up from 2.5 crore in March 2024, indicating significant formalization within the sector.
- With MSMEs contributing nearly 30% to India’s Gross Domestic Product (GDP) and providing employment to over 11 crore individuals, empowering this sector is crucial for driving sustainable and long-term economic growth.
Key Findings:
i.Export Potential: MSMEs contribution to India’s total exports has steadily grown, reaching 43.59% in Financial Year 2022-23 (FY23), 45.73% in FY24, and 45.79% in FY25.
ii.Formalization Drive: The total number of establishments in the sector increased substantially from 6.50 crore in 2022-23 to 7.34 crore in 2023-24, showing a 13% growth.
iii.Access to credit: Due to limited credit access, 12% of micro enterprises turned to informal borrowing, compared to 3% of small and 2% of medium enterprises.
iv.Digital Lending: While 18% of MSMEs use digital lending, 90% accept digital payments, highlighting a strong growth opportunity in the digital lending space.
- This trend, bolstered by platforms such as the Unified Payments Interface (UPI), has the potential to significantly improve credit accessibility in the future.
v.Credit Gap: Despite credit supply to MSMEs increasing, the sector has a broad addressable credit gap of Rs. 30 lakh crore.
- Medium enterprises face the highest credit gap, at 29%, followed by micro and small enterprises.
- The credit gap is notably wider in the services sector at 27%, and even more pronounced at 35% among women-owned Micro, Small, and Medium Enterprises (MSMEs), underscoring the urgent need for targeted policy interventions.
vi.Women Entrepreneurship: Annual Survey of Unincorporated Sector Enterprises (ASUSE 2023-24) shows female owned proprietary establishments increased from 22.9% in 2022-23 to 26.2% in 2023-24.
- As of January 2025, they accounted for 70% of the MSMEs registered on Udyam Assist, while women-owned MSMEs accounted for 20.5% of the entities registered on the Udyam platform.
vii. 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.
viii.Sustainability: More than one third of the respondents in the MSME sector have adopted some form of sustainable practices.
- 31% of the respondents in the primary survey have adopted Energy-efficient lighting and machinery.
- 21% have adopted Renewable Energy(RE) Sources.
- 33% cite limited awareness as a key barrier to further adoption.
About Small Industries Development Bank of India (SIDBI):
Chairman & Managing Director(CMD)- Manoj Mittal
Headquarters– Lucknow, Uttar Pradesh(UP)
Established- 1990
