NITI Aayog’s New Report Aims to Boost MSME Competitiveness in India

NITI Aayog released a report titled Enhancing Competitiveness of MSMEs in India, in collaboration with the Institute for Competitiveness (IFC). The report provides a comprehensive analysis of India’s Micro, Small, and Medium Enterprises (MSMEs), identifying key challenges and presenting a set of systemic reforms aimed at boosting their competitiveness. The recommendations focus on financing, innovation, skill development, and market access, paving the way for MSMEs to thrive in both domestic and global markets.

Why in News?

This report comes at a critical time as India seeks to strengthen its MSME sector, a vital component of the national economy. With MSMEs contributing significantly to employment and GDP, addressing barriers to their growth is essential for sustainable economic development. NITI Aayog’s roadmap, through this report, aims to unlock the potential of MSMEs by focusing on systemic reforms in critical areas like financing, skill development, and technology adoption, thereby driving growth and competitiveness.

Aim and Objectives

• The primary goal of the report is to enhance the competitiveness of MSMEs by addressing key challenges such as limited access to credit, lack of skilled labor, technology adoption, and market integration.
• The report outlines actionable recommendations to ensure MSMEs can contribute more effectively to India’s economic growth and achieve better integration into global value chains.

Key Findings and Recommendations

Access to Credit

• MSMEs have seen a notable increase in access to formal credit, from 14% to 20% for micro and small enterprises between 2020-2024, and from 4% to 9% for medium enterprises. Despite this, a significant credit gap remains, with only 19% of MSME credit demand met.
• The report suggests revamping the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to address these gaps and enable scalable, inclusive finance.

Skill Development

• There is a pressing need to tackle the skill shortages in the MSME workforce. Many workers lack formal vocational training, hindering productivity and growth.
• The report calls for enhanced training and capacity-building initiatives, especially in the areas of research and development (R&D) and innovation.

Technology Adoption and Innovation

• MSMEs face challenges in adopting modern technologies due to unreliable electricity, weak internet connectivity, and high implementation costs. The report calls for state governments to promote digital tools and provide access to modern technologies to boost competitiveness.
• Many MSMEs also fail to invest in R&D and quality improvements, making it difficult to compete globally.

Market Access and Global Competitiveness

• To improve MSME access to global markets, the report emphasizes digital marketing training, partnerships with logistics providers, and the creation of platforms for direct market linkages.
• The focus is on regions with high growth potential like the northeastern and eastern regions of India.

Policy Framework

• The report suggests creating a robust, adaptive, and cluster-based policy framework at the state level. This will facilitate innovation, improve competitiveness, and enable MSMEs to participate more actively in economic transformation.