NITI Aayog has proposed easing eligibility criteria for state-level schemes offering subsidies for capital and interest on loans to boost the competitiveness of micro, small and medium enterprises (MSMEs) in the country.
The recommendations, part of its latest report, Enhancing MSMEs Competitiveness in India, aim to bridge the sector’s massive credit gap and improve access to skill development initiatives, especially for MSMEs that face challenges due to their location or size.
"At the state level, lowering eligibility barriers for schemes that offer subsidies for capital and interest on loans will better address the financing needs of MSMEs throughout their lifecycle," the report said, according to PTI.
The report also underscored the role of non-banking financial companies (NBFCs) in expanding MSME credit access, especially in remote areas. To support this, the report suggested that SIDBI should step in to fund and improve NBFCs’ capacity and governance structures.
The NITI Aayog, according to PTI, revealed in its report that despite some improvement in MSMEs loan coverage, a significant credit gap still exists. Between 2020 and 2024, the share of micro and small enterprises accessing credit through scheduled banks rose from 14% to 20%, while medium enterprises saw an increase from 4% to 9%.
To address this shortfall, the report called for reforms to the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), recommending enhanced regulatory oversight and reduced risk premiums for borrowers seeking CGTMSE funding.
Beyond credit and funding reforms, experts believe that deeper structural support is necessary to help MSMEs scale and integrate into national and global supply chains.
Integrate MSMEs into larger supply chains
NITI Aayog Vice Chairman Suman Bery, while speaking at the CII National Conference on Responsive Supply Chain for Indian Manufacturing on March 6 in New Delhi, emphasised the need to integrate MSMEs into broader supply chains to drive real competitiveness and achieve 7-8% growth in the country, reported ANI.
“India’s corporate sector must step up, and MSMEs need to be part of larger trade ecosystems,” he said as per ANI.
This outlook aligns with Finance Minister Nirmala Sitharamans Budget 2025 announcement to improve credit guarantee cover for MSMEs. The guarantee limit, as per reports, will be increased from Rs 5 crore to Rs 10 crore, unlocking an additional Rs 1.5 lakh crore in credit over the next five years.
(With inputs from PTI.)
