The key findings of the study are mentioned below:

• Formalization Drive: The MSME sector, especially micro and small enterprises, has seen significant formalization through Udyam Registration and Udyam Assist Portal, with over 6.2 crore registrations by March 2025 (up from 2.5 crore in March 2024).  
• Access to Credit: The survey respondents consider timely and adequate credit access as one of their key challenges despite the comprehensive policy initiatives in that regard. While borrowings from informal sources are minimal for small and medium enterprises at 3% and 2% respectively, it is still relatively significant at 12% for micro enterprises.
• Digital Lending Opportunity: With 18% of MSMEs using digital lending platforms and 90% accepting digital payments, the sector shows promising digital adoption. This trend, supported by platforms like UPI, can enhance credit access going forward.
• Credit Gap: Increased credit supply to MSMEs is in evidence. The study broadly estimates that the sector still has an addressable credit gap of about 24% or ₹30 lakh crore. The gap is higher in the services sector at 27%; it is estimated to be also higher at 35% for women-owned MSMEs, indicating a need for targeted policy actions.
• Women Entrepreneurship: Women entrepreneurship has become a significant aspect in the MSME sector with 26.2% in proprietary enterprises being owned by women as per ASUSE 2023-24, signalling growing inclusivity. 76% of the women led MSME respondents have access to credit, but they continue to face higher challenges vis-à-vis their male counterparts with 41% highlighting credit access and high competition as the largest obstacle to their growth.  
• Market Access Challenges: According to the survey, a majority of the MSMEs have been slow to adopt modern channels to reach customers. Around 70% of the survey respondents continue to use traditional modes of marketing, which hinders their scalability and ability to remain competitive. Effective utilization of e-commerce and digital marketing can provide MSMEs with improved access to new markets and customers.
• Export Potential: MSMEs increased their merchandise export share from 43.6% (FY23) to 45.7% (FY24). Exporting MSMEs show better tech adoption than non-exporters, but cite supply chain issues, credit access, and competition as major hurdles, though they.
• Skilled Labour Shortage: Around a fourth of the surveyed MSMEs cite the lack of skilled manpower as one of their major challenges. Skilled labour shortages are particularly high in defence equipment, readymade garments, the hotel sector, tiles, and sanitarywar,e as reflected in the survey.
• Infrastructure & Technology Gaps: Inadequate infrastructure and technology adoption affect productivity and competitiveness; more prominent in sectors like auto components, iron and steel and transport and logistics. A significant proportion of the respondents cited technology adoption as a major obstacle to their growth.
• Sustainability Efforts: Over one-third of MSMEs have adopted sustainable practices; 31% use energy-efficient systems, and 21% utilize renewable energy. However, 33% cite limited awareness as a key barrier to further adoption.

The report is available at https://www.sidbi.in/uploads/Understanding_Indian_MSME_sector_Progress_and_Challenges_13_05_25_Final.pdf

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During the inaugural program, Dr. Swati Mujumdar, Pro-Chancellor of SSPU,  emphasized that the STEM program is not just a training course but a mission for SSPU to actively contribute to the entrepreneurial ecosystem of Maharashtra. She also spoke about the commitment by SSPU to providing continuous mentorship and fostering a culture of entrepreneurship among students of diverse backgrounds and age groups.

Mr. Anjani Kumar Srivastava, General Manager and Regional In-charge of SIDBI delivered an inspiring address, congratulating the 30 selected participants. He praised SSPU for its proactive approach to developing entrepreneurship and emphasized the importance of such initiatives in creating sustainable businesses that contribute to economic growth. He said that The Launchpad 30 program is a great step towards nurturing talent and fostering innovation in Maharashtra,”  Dr. Rajesh Ingle, Vice Chancellor of SSPU, was also present during the event.

The selection process for Launchpad 30 was both comprehensive and rigorous. Applicants underwent an Entrepreneurship Acumen Detection Test (EADT) followed by interviews to assess their entrepreneurial potential. The selected participants come from diverse educational and professional backgrounds, ranging from recent graduates to individuals with informal businesses in their early stages. Their ages vary from 20 to 40 years, reflecting the program’s wide appeal.

The 3-month training will be followed by a year-long incubation support, where participants will have access to resources, networking opportunities, and expert guidance. This combination of training, mentoring, and funding aims to give participants the best possible chance of building successful, sustainable enterprises.

The Launchpad 30 program offers free training, including meals and hostel accommodation for participants. In addition, the program provides hands-on mentorship and guidance to help them develop viable business plans and navigate the complexities of entrepreneurship. Successful ventures emerging from the program will receive a seed funding amount of Rs. 30,000 to kickstart their businesses.

This initiative reflects SSPU’s commitment to fostering entrepreneurship and innovation, creating a new generation of business leaders who will contribute to the growth of the Country’s economy.

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Shri Manoj Mittal has over 33 years of extensive experience in the Finance sector, including his previous tenures as Managing Director and CEO at the Industrial Finance Corporation of India (IFCI) and Deputy Managing Director at SIDBI.

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Speaking on the findings of this edition of the MSME Pulse, Sivasubramanian Ramann, Chairman and Managing Director, of SIDBI, said: “Lending to the MSME sector continued in H1:FY2024, despite the conclusion of the Emergency Credit Line Guarantee Scheme (ECLGS) scheme, indicating underlying growth momentum of the sector. Technology is aiding in lending to the MSME sector. Facilitating wider adoption of online loan applications, financial management tools, and digital payment platforms along with the utilization of robust analytics, can enhance the lending to the MSMEs and help fortify India’s businesses for sustained growth. SIDBI is working on the above lines and is leveraging technology, utilizing the Digital Public Infrastructure of the Government of India, to augment credit flow to the sector with faster turnaround.”

In the July-September 2023 quarter, the total value of new MSME credit originations was INR 243K Crores, with Small segment enterprises accounting for the largest share at 42%. Sustained credit supply has enabled substantial portfolio growth of 11% amounting to INR 28.2 Lakh Crores across 80 Lakh MSME entities­ in the quarter under review.

During this period, overall balance-level delinquencies, measured as 90 days past due to 720 days past due and those reported as ‘sub-standard’, have improved and stood at 2.3%.

“MSME portfolio performance improved across all borrower segments as delinquency rates declined. In the quarter ending September 2023, we saw the lowest delinquency rate in the last two years. With promising economic growth prospects reflected through strong demand, stable portfolio growth, and improved credit performance, now is a good time for lenders to expand their MSME lending book. The sectoral study covered in this MSME Pulse report showcases the unique nuances of each sector within the MSME segment. The wide spectrum of occupations covered by MSMEs has the potential of catalyzing social development through economic empowerment,” added Rajesh Kumar, Managing Director and CEO, of TransUnion CIBIL.

The MSME portfolio excludes ~ ₹ 2.5 lakh crores of default cases beyond 720 days past due (DPD) /loss /doubtful category. The delinquency rate definition excludes legacy accounts with DPD beyond 720 days or reported as loss/doubtful

By building an online lending journey with analytical and objective credit risk assessment tools like FIT Rank, lenders can achieve improved operational efficiencies and reduce turnaround times significantly.

Rapid credit expansion across semi-urban and rural geographies

In the July-September 2023 quarter, 46% of MSME originations were in semi-urban and rural regions. Almost half (49%) of the Micro2 segment’s originations came from the semi-urban and rural areas, whereas 39% of originations in the Small segment came from these regions.

• Micro Exposure up to INR 1 Cr; Small: Exposure between INR 1 Cr and INR 10 crs; Medium Exposure between INR 10 crs and INR 50 crs
• Medium Risk: CMR 4-6 (Share of Borrowers)
• The risk percentage is based on the origination data where the risk score is available.

One of the key factors contributing to this expansion is the improvement in credit profiles of MSMEs – the share of high-risk MSMEs (CMR 7-10) has reduced to 13% in the July-September 2023 quarter from 15% during the same period the previous year. Medium risk (CMR 4-6) continues to have a high share with 55% of MSMEs in this risk segment. 

Analysis across the states shows that originations from the large states with Maharashtra, Gujarat, Delhi, Tamil Nadu, and Uttar Pradesh continue to be high, accounting for 47.2% of the origination value. There is also a higher growth rate especially in Uttar Pradesh and Tamil Nadu in the quarter ending Sep 2023.

These states also account for approximately 42% of New-to-Credit (NTC) originations in the Micro MSME segment, further driving the credit inclusion initiative. Within the Micro MSME segment, Maharashtra has a high share in the low-ticket-sized Very Small segment and Micro1 segment, while Gujarat has a high share in the Micro 2 segment.

The manufacturing sector accounts for the highest credit originations

As per the latest information released by the Ministry of Statistics and Programme Implementation in December 2023, output in MSME manufacturing accounted for 40.83% of output in all India manufacturing during the year 2021-22. This is also reflected in TransUnion CIBIL Commercial Bureau data where the Manufacturing sector accounts for 37% of value originated and has the largest share, followed by the ‘Trades’ sector with a 28% share. Professional Services and Other Sectors together account for the remaining 35% share (of the data considered for this report).

Textiles is the highest contributing sub-sector within Manufacturing sector originations. The majority of originations within sub-sectors are led by the Medium segment (10 Crores to 50 Crores) and catered for by private banks. The geographical distribution of originations across sub-sectors is concentrated in three top-contributing states: Gujarat, Tamil Nadu, and Maharashtra. While the manufacturing sector accounts for 37% of origination value it has only 25% share of the volumes originated. However, the manufacturing sector experienced an increased share in originations by value within the Micro segment compared to the previous year. The ‘Trade’ sector accounts for the highest share of origination volumes with 39% of loans originating; 36% of these disbursements are from NTC MSMEs.

As the borrower profile and credit behavior of each sector is different, these borrowers’ credit performance is also differently influenced by intrinsic sectoral impact. Leveraging data and analytics to understand borrower behavior is essential to continue sustainable growth across sectors.  The core advantage of sector-wide growth is the vast geographical expanse it covers, spreading through areas where urbanization and multiple employment opportunities and development are essential.

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