MSMEs: The MSME sector is the clear answer to the question of who actually propels the Indian economy. This is the part that seems insignificant yet has a huge influence.
This fact is made abundantly evident in the most recent Economic Survey 2025–2026. According to the report, the nation’s Micro, Small, and Medium-Sized Businesses are not only the foundation of the sector but also the most dependable participants in India’s development narrative.
MSMEs make up about 35.4% of India’s overall manufacturing output, according to this survey. Most remarkably, this industry accounts for almost 48.58 per cent of the nation’s total exports. This indicates that an MSME is connected in some way to nearly every second export.
A Lifeline for Millions
The major advantage of the MSME sector is the human touch associated with it. At present, there are about 74.7 million MSME units in the country, employing 328.2 million people. This is the second-largest employment-generating sector after the agricultural sector in the country.
This implies that whether it is an urban or rural area, small factories, workshops, service sectors, and startups are keeping the lives of millions of families afloat. When we speak about “inclusive growth,” the MSME sector is the most vibrant example of it. They are not confined to big cities but also provide employment and opportunities in small towns and rural areas.
A New Era of Trust in Credit and Finance
Funding has been the MSME sector’s largest obstacle in recent years. The Economic Survey, however, shows that things are shifting. MSME financing has recently experienced strong momentum due to a number of government initiatives. Notably, the largest contributor to the expansion of industrial credit during the first half of FY 2026 was MSME lending. Compared to large businesses, the amount of credit given to MSMEs has increased significantly year over year. Small firms have been able to grow, install new equipment, and gain a solid market position as a direct result of this.
New Strength from the Self-Reliant India Fund
The Self-Reliant India (SRI) Fund, launched by the government, has proved to be a huge support for MSMEs. The total amount of the fund is ₹50,000 crore, out of which ₹10,000 crore has been contributed by the government, and the remaining ₹40,000 crore has been raised from private equity and venture capital.
As of November 2025, about ₹15,442 crore has been invested in 682 MSMEs through this fund. This amount is being provided to MSMEs in the form of equity, quasi-equity, and debt to provide growth capital to MSMEs. The result is already visible on the ground, as small businesses are now dreaming big.
Public Markets and Digital Participation
The enormous growth of SME public markets over the previous two years is again highlighted in the Economic Survey. New opportunities for small businesses to raise funding have been made possible by improved market conditions and growing engagement from digital retail investors. This shift is connecting MSMEs to capital markets, moving beyond traditional bank loans.
Innovation and Future Preparedness
The MSME sector is no longer restricted to traditional sectors. Innovation is being institutionalised through the government’s MSME-Innovative scheme. The scheme focuses on incubation, design interventions, and safeguarding intellectual property rights. This is helping small businesses to get ready for the global market with new technologies and products.
India’s Global Role and MSMEs
The Economic Survey estimates that in 2024, India’s proportion of world merchandise exports was 1.8% and its share of global manufacturing GVA was roughly 2.9%. These numbers show that India has enormous potential to increase its manufacturing presence worldwide. MSMEs will play a critical part in this journey since they support local value addition and build supply networks.
Disclaimer: The Economic Survey 2025–2026 and accessible government data served as the foundation for this article. Government programs, laws, and data are all vulnerable to change throughout time. Please check official sources and pertinent government notifications before making any business or investment choices.
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