Why in News?
NITI Aayog has released a report titled ‘Designing a Policy for Medium Enterprises’ that proposes concessional credit schemes, digital portals, R&D support, and innovation clusters to boost the growth of medium-sized businesses. The report is also seen as a foundational step to reform the wider MSME ecosystem.
Key Recommendations of the Report
| Focus Area | Recommendation |
|---|---|
| Financial Access | Concessional working capital loans up to ₹25 crore; Medium Enterprise Credit Card with ₹5 crore pre-approved emergency limit; extend NPA classification from 90 to 180 days |
| Technology & Industry 4.0 | Upgrade Technology Centres into Industry 4.0 Competence Hubs (AI, IoT, Automation); adopt hub-and-spoke implementation model |
| R&D and Innovation | Allocate 25–30% of Self-Reliant India Fund to medium enterprise R&D; introduce competition-based funding aligned with national priorities |
| Cluster Testing | Extend Cluster Development Programme to include sector-specific testing facilities; encourage PPPs and digital monitoring for quality compliance |
| Skill Development | Real-time skill gap mapping via MSME Sampark Portal; expand skill programs to cluster-based, export-oriented training |
| Digital Governance | Launch dedicated Udyam sub-portal integrated with AI tools for compliance tracking, eligibility check, and market updates |
MSME Sector Overview
| Feature | Details |
|---|---|
| Size and Spread | 5.93 crore MSMEs in India; Micro = 98%, Medium = 0.3% (69,300 units) |
| Economic Contribution | ~29% of GDP, 40% of exports, 27 crore jobs (26% women) |
| Export Capacity | Only 1.36% registered MSMEs export; medium enterprises = 40% of MSME exports |
| Digital Transformation | 72% MSME transactions digital; 45% adopted some form of AI |
| Sustainability | Leading clean energy adoption; supported by RAMP & Telangana MSME Policy |
Key Challenges in the MSME Sector
| Area | Issue |
|---|---|
| Credit Access | 17% have no credit access; informal borrowing common; lack of collateral and credit history |
| Compliance Burden | Complex taxation, overlapping regulations, limited compliance manpower |
| Infrastructure Gaps | Logistics cost 14–18% of GDP vs global 8%; weak rural connectivity |
| Technology Adoption | Just 7.7 million digital-ready MSMEs; 55% have not adopted AI |
| Skill Deficit | 47% report lack of skilled labor, especially in manufacturing & IT |
| Market Reach | Only 1.36% registered MSMEs export; low brand visibility and market intelligence |
| High Informality | Large unregistered segment lacks access to formal benefits, loans, IPR |
Way Forward
| Strategy | Details |
|---|---|
| Simplify Compliance | Unified GST/Udyam tax filings; 3-year transition window for growing MSMEs |
| Real-Time Monitoring | National dashboard on credit, tech, skills, and jobs; centralised MSME transformation council |
| Fintech-Driven Credit | Use AI-based credit scoring, blockchain lending, digital collateral for better loan access |
| Innovation Hubs | Regionally distributed centres offering AI, robotics, IoT support |
| Digital Upskilling | National program for digital/vocational skills with global certification |
| Unified Market Portal | Merge GeM with global platforms; provide export intelligence and onboarding help |
| Sustainable Growth | Green loans, carbon credits, rural infra, women-led MSMEs to ensure inclusive growth |
Prelims Practice Questions
- Consider the following statements:
- Medium enterprises in India are defined as those with an investment up to ₹100 crore and turnover up to ₹500 crore.
- Medium enterprises constitute more than 5% of all registered MSMEs in India.
Which of the above is/are correct?
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
Answer: d) Neither 1 nor 2
- Which of the following schemes is supported by the World Bank and aims to boost sustainability in MSMEs?
a) MUDRA Yojana
b) RAMP Scheme
c) PM Vishwakarma Yojana
d) Aspire Scheme
Answer: b) RAMP Scheme - With reference to the Indian MSME sector, consider the following:
- MSMEs contribute over 40% to India’s GDP.
- Medium enterprises contribute the most to MSME exports.
- Over 70% of MSME transactions in India are now digital.
Which of the above is/are correct?
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) All of the above
Answer: b) 2 and 3 only
Mains Practice Question
Q. Medium enterprises, despite being small in number, possess high innovation and export potential. Discuss how targeted policy reforms for medium enterprises can catalyse broader MSME sector growth in India. Suggest measures to integrate micro and small enterprises into this transformation journey. (250 words)
