India’s micro, small, and medium enterprises (MSMEs) have received an estimated ₹8 trillion in credit over the past three years, marking a period of unprecedented financial inclusion for the sector. According to FICCI-CMSME President Girish Luthra, this growth reflects the combined efforts of the Reserve Bank of India (RBI) and the government to make financing more accessible and affordable for small businesses.
Collateral-Free Funding Expands Lending Reach
Luthra noted that earlier, limited access to credit and stringent collateral requirements often deterred smaller firms from seeking formal financing. “The government and RBI worked together to simplify the process by setting a collateral-free lending threshold — initially ₹1 crore, now expanded to ₹10 crore — to help MSMEs access capital with ease,” he said.
The initiative has played a key role in enabling small businesses to modernize operations, expand production, and compete in national supply chains. Luthra emphasized that MSMEs now account for nearly 45% of total public procurement, a sign of the sector’s growing formalization and trust among institutional buyers.
Driving Awareness and Transparency
While significant reforms have been introduced, a lack of awareness continues to limit their reach. To bridge this gap, FICCI-CMSME plans to launch 100–200 national outreach programs in collaboration with the Ministry of MSME and the National Small Industries Corporation (NSIC). These initiatives aim to help entrepreneurs understand available schemes and navigate documentation and compliance processes effectively.
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Digital platforms such as the Government e-Marketplace (GeM) have further strengthened MSME participation, ensuring greater transparency in procurement and fostering sustainable trade practices. “With over six million enterprises driving this ecosystem, government support combined with industry collaboration is enabling inclusive growth,” Luthra said.
MSMEs Remain Low-Risk Borrowers
Contrary to common perception, the MSME sector contributes minimally to the country’s Non-Performing Assets (NPAs). Luthra clarified that MSMEs account for just 3.9% of total NPAs, far below that of large corporations. This has strengthened the RBI’s confidence in extending collateral-free loans and risk-based lending frameworks.
Reforms at State Level Fueling Competitiveness
Luthra also pointed out that interstate competition is improving the business environment, with states adopting reforms in labour laws, land availability, and cluster-based plug-and-play models to attract investment. “Healthy competition among states is leading to faster implementation and better results,” he said.
The convergence of digital credit, policy reform, and grassroots outreach has positioned India’s MSME sector as a cornerstone of industrial growth and job creation — critical to achieving the vision of Viksit Bharat 2047.