While large manufacturers make headlines with their investment numbers, they operate within a multi-layered ecosystem of tier 1 to tier 4 suppliers, most of which can be categorised as MSMEs. It is key to provide a better ecosystem to improve ease of doing business for MSMEs.

“Large players cannot do everything on their own,” Nirmal Kumar Minda, Chairman, Assocham said, emphasizing that scale-driven growth inevitably flows down the value chain when the ecosystem functions efficiently.

Despite positive intent and policy direction, MSMEs continue to face structural challenges, he added. Cost of capital continues to be high for MSMEs.

Capital allocation is also another area of concern.

For a typical MSME planning to invest ₹100, nearly 50% is often spent on land and buildings, leaving limited resources for machinery, technology, and working capital

- Nirmal Kumar Minda, Chairman, Assocham

He underlined the need to ensure availability of ready-to-use industrial infrastructure on rental models that would significantly alter this equation.

If MSMEs are able to redirect capital away from fixed real estate and toward capex and operational expansion, capacity creation could accelerate sharply, leading to faster job creation and higher productivity.

PLI Schemes

The Economic Survey underscores the success of PLI schemes in catalyzing investment, and while these incentives are often accessed by large firms, Minda insists MSMEs are indirect but substantial beneficiaries. As production volumes increase, exports rise, domestic consumption expands, and unit costs fall, creating demand across supplier tiers.

This cascading effect, they argue, strengthens MSMEs by embedding them into global and domestic value chains, rather than isolating growth within large corporations.

Another recurring theme in the Economic Survey is self-reliance and import substitution. With a domestic market of 1.4 billion consumers, industry voices question why certain products and capital equipment continue to be imported.

Limited domestic manufacturing of capital goods and machinery also adds to the cost for MSMEs. Developing local machinery manufacturing could reduce dependence on imports and improve competitiveness. At the same time, greater collaboration between startups, R&D institutions, and MSME manufacturers is seen as essential to bridge technology gaps through proof-of-concept development and applied innovation.

Antim Suman, Co-founder and Chief Operating Officer (COO) at Edgistify said, "We are hopeful that the Budget will outline a decisive policy direction towards expanded credit access, revamped credit guarantee frameworks, higher investment and turnover thresholds. Targeted financial products for microenterprises, measures that would significantly strengthen liquidity and resilience in this segment," Suman added. 

Speaking to another MSME owner from Kerala who wished to remain anonymous said that the biggest challenge in the industry is that the schemes are not reaching to the right people in the rural areas of the country. 

"While the government is doing great job and huge investments are being made to provide benefits to MSMEs, the major issue is that these benefits are not reaching in the rural areas of the country which should be looked at be improved," the MSME owner said.

The China MSME story

An earlier report published by the Secretariat pointed out the role of MSMEs in shaping China’s economic growth.

Globally, MSMEs remain a powerful vehicle of the economy providing large scale employment. These account for 90 per cent of businesses making up for 50 per cent of GDP worldwide.

In China, MSMEs account for more than 98.5 per cent of all businesses in contributing about 60 per cent of the GDP. 

In India, well carved out policy measures are the need of the day to support the MSMEs.