The UN General Assembly in its 74th Plenary held on the 6th April, 2017 declared 27th June as Micro, Small and Medium-sized Enterprises Day, recognizing the importance of Micro, Small and Medium-sized Enterprises in achieving sustainable development goals and in promoting innovation, creativity and sustainable work for all. Micro, Small and Medium-sized Enterprises What is a micro-, small, or medium-sized enterprise? The criteria for defining the size of a business differ from country to country. In India, the definition of micro-, small and medium-sized enterprises is established according to Investment in Plant & Machinery/equipment and Annual Turnover. A micro enterprise is an enterprise where the investment in plant and machinery or equipment does not exceed Rs 2.5 crore and turnover does not exceed Rs 10 crore; A small enterprise is an enterprise where the investment in plant and machinery or equipment does not exceed Rs 25 crore and turnover does not exceed Rs 100 crore; and A medium enterprise is an enterprise where the investment in plant and machinery or equipment does not exceed Rs 125 crore and turnover does not exceed Rs 500 crore. All enterprises are required to register online on Udyam Registration Portal and obtain ‘Udyam Registration Certificate’. According to the data provided by the International Council for Small Business (ICSB), formal and informal Micro-, Small and Medium-sized Enterprises (MSMEs) make up over 90% of all firms and account on average for 70% of total employment and 50% of GDP. These enterprises, which generally employ fewer than 250 persons, are the backbone of most economies worldwide and play a key role in developing countries. These types of enterprises are responsible for significant employment and income generation opportunities across the world and have been identified as a major driver of poverty alleviation and development. MSMEs tend to employ a larger share of the vulnerable sectors of the workforce, such as women, youth, and people from poorer households. MSMEs can even sometimes be the only source of employment in rural areas. As such, MSMEs as a group are the main income provider for the income distribution at the "base of the pyramid". How they contribute to the achievement of the Sustainable Development Goals Micro, small and medium sized enterprises are vital in achieving the Sustainable Development Goals, in particular in promoting innovation, creativity and decent work for all. As we steer our ship into a new development course in a changing world, the importance of Micro, Small, and Medium Enterprises (MSMEs) and the circular economy is crystal clear. MSMEs, which account for 90% of businesses, more than 70% of employment, and 50% of GDP worldwide, remain the core of the economy for most societies. Efforts to enhance access to finance for SMEs across key sectors of national economies are an important element of implementation of the Sustainable Development Goals (SDGs). SDG targets 8.3 and 9.3 call for enhancing the access of SMEs to financial services. In addition, SMEs are an important element in the implementation of SDG 8 (decent work and economic growth) and SDG 9 (industry, innovation and infrastructure. Theme for 2025 Enhancing the role of Micro, Small and Medium-sized Enterprises (MSMEs) as drivers of Sustainable Growth and Innovation Micro, small and medium-sized enterprises are key sources of jobs, income, and local growth—especially for women, young people, and vulnerable groups. Their size and flexibility help build strong, fair, and sustainable communities. However, many of these businesses face serious challenges. They often struggle to get loans, deal with poor infrastructure, and work under tough conditions. Many operate informally, which limits their access to funding, legal rights, and government support. Did you know? 600 million jobs will be needed by 2030 to absorb the growing global workforce, which makes SME development a high priority for many governments around the world. In emerging markets, most formal jobs are generated by SMEs, which create 7 out of 10 jobs. Access to finance is disproportionately difficult for smaller firms in the least developed countries (LDCs), with 41 percent of SMEs in LDCs reporting access to finance as a major constraint to their growth and development, by comparison to 30 percent in middle-income countries (MICs) and only 15 percent in high-income countries (HICs). Source : UN Initiatives taken by Ministry of MSME in India Micro, Small and Medium Enterprises (MSME) sector has emerged as a highly growing and dynamic sector of the Indian economy over the last decade. With over 7.34 crore estimated MSMEs employing around 26 crore individuals, the sector plays a crucial role in promoting entrepreneurship, innovation, and economic resilience. Out of these estimated MSMEs of 7.34 crore, about 6.2 crore have Udyam Registration (including registrations in Udyam Assist Platform). Micro enterprises account for 98.64% share, Small Enterprises account for 1.24% share and Medium enterprises account for 0.12% share in the total Udyam registrations The share of MSMEs in the country’s Gross Value Added (GVA) increasing from 27.3% in FY2020-21 to 29.6% in FY2021-22 and 30.1% in FY2022-23 highlights its growing role in national economic output. Exports from MSMEs have seen substantial growth, rising from ₹3.95 lakh crore in FY2020-21 to ₹12.39 lakh crore in FY2024-25. The number of exporting MSMEs has also surged, increasing from 52,849 in FY2020-21 to 1,73,350 in FY2024-25 (up to May 2024). MSMEs contribution to India’s total exports has steadily grown, reaching 43.59% in FY2022-23, 45.73% in FY2023-24, and 45.79% in FY2024-25 (up to May 2024). Despite its crucial role, the MSME sector faces several constraints, including the following: While improving, still limited access to timely and adequate formal credit Inadequate infrastructure and technology adoption, hindering productivity. Skilled labour shortages, skill gaps and difficulty in attracting talent. Market access constraints, with intense competition from large companies and in export markets. The impact of climate change and sustainability concerns, requiring a transition to greener practices Six pillars have been identified on which the government's endeavours would be built formalization and access to credit increased access to market and e-commerce adoption increased productivity through modern technology enhanced skill levels and digitalization in the service sector support to Khadi, Village, and Coir industry to globalize them empowerment of women, artisans, through enterprise creation. Major schemes for MSME sector Prime Minister’s Employment Generation Programme (PMEGP) which is a major credit-linked subsidy programme aimed at generating self-employment; Subsidy: 15-35% of project cost (up to ₹50 lakh for manufacturing and ₹20 lakh for services). Special category beneficiaries (SC/ST/Women/Ex-servicemen) get higher subsidy. In 2023-24, PMEGP supported 89,118 enterprises, facilitating entrepreneurship across various sectors. The scheme disbursed ₹3,093.87 crore as margin money subsidy, enabling small businesses to scale operations and sustain growth. As a result, an estimated 7,12,944 employment opportunities were generated, reinforcing PMEGP’s role in strengthening self-employment and job creation nationwide. Pradhan Mantri MUDRA Yojana (PMMY): PMMY has played a pivotal role in empowering non-corporate, non-farm small and micro enterprises by providing loans of up to ₹10 lakh. To strengthen support for aspiring entrepreneurs, the finance minister announced an increase in the loan limit to ₹20 lakh during the Union Budget 2024-25 on July 23, 2024. This new limit came into effect from October 24, 2024. More than ₹20 lakh crore has been sanctioned and disbursed under PMMY during FY2021 to FY2425 Stand Up India (SUPI) Scheme facilitates bank credit to Women and SC/ST entrepreneurs in setting up greenfield enterprises. At the end of December 2024, total loan outstanding in the scheme was ₹57,466 crore. Special Credit Linked Capital Subsidy Scheme: SCLCSS was introduced under National SCST Hub (NSSH) with the objective to promote new enterprises and support the existing enterprises in their expansion for enhanced participation in the public procurement. Subsidy of 25% has been provided to the eligible SC-ST MSEs of manufacturing as well as service sector under NSSH on institutional finance up to ₹1 crore, for procurement of plant & machinery / equipment (i.e., a subsidy cap of ₹25 Lakhs). The 'PM Vishwakarma' scheme, launched during 2023 by the Government of India, aims to enhance the quality and reach of products and services by artisans and craftspeople, integrating them into domestic and global value chains. Provides skill training, financial assistance (up to ₹3 lakh loan), and marketing support Credit Guarantee Schemes: Credit Guarantee Scheme for Micro & Small Enterprises (CGTMSE): CGTMSE provides credit guarantee for collateral-free loans up to ₹10 crore to eligible MSEs. The coverage is 85% for micro-enterprises (loans up to ₹5 lakh) and 75% for others. The Trust has approved a cumulative guarantee coverage of ₹9.34 lakh crore (1.15crore nos) as on 31/03/2025 to eligible MSEs. Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME): This scheme provides for 60% guarantee coverage by National Credit Guarantee Trustee Company Limited (NCGTC) to Member Lending Institutions (MLIs viz., SCBs, AIFIs and NBFCs) for collateral-free term loan assistance upto ₹100 crore sanctioned to eligibleMSMEs for the purchase of equipment / machinery with the minimum cost of such equipment / machinery being at least 75 per cent of the project cost. Credit Guarantee for Pradhan Mantri Mudra Yojana (PMMY): Loans up to ₹20 lakh are provided with the backing of a credit guarantee provided by the Credit Guarantee Fund for Micro Units (CGFMU), managed by the National Credit Guarantee Trust Company Ltd (NCGTC). Credit Guarantee Scheme for Start-ups (CGSS): CGSS, provides for guarantee against the credit instruments extended by Member Institutions (MIs viz., Banks, FIs, NBFCs, SEBI registered Alternative Investment Funds) to finance eligible startups recognized by DPIIT. During the Union Budget 2025-26, the guarantee cover underCGSS has been increased from the present level of ₹10 crore to ₹20 crore and guarantee fee stands reduced to 1 % for loans in 27 priority sectors Launch of Udyam Assist Platform on 11.01.2023 to bring Informal Micro Enterprises (IMEs) under the formal ambit of MSME for availing the benefits under Priority Sector Lending; Registrations in the Udyam Asist Platform has crossed 2.6 crore. Uttar Pradesh and West Bengal are the top two states accounting for 12% and 11% of the total registration respectively; followed by Maharashtra, Madhya Pradesh and Karnataka. The top 10 states account for 68% of the total registrations in the platform. Registrations in 7 North Eastern States combined have crossed 5.73 lakh. New credit scoring model The Government has launched a new Credit Assessment Model for micro and small enterprises based on scoring their digital footprints which was announced in Union Budget, July 2024. This credit assessment model will leverage the digitally fetched and verifiable data available in the ecosystem and devise automated journeys for MSME Loan appraisal using objective decisioning for all loan applications and model-based limit assessment for both Existing to Bank (ETB) as well as New to Bank (NTB) MSME borrowers. The digital footprints used by the model may include Name and Pan authentication using NSDL, Mobile and email verification using OTP, API fetch of GST data through service providers, Bank Statement Analysis using account aggregator, ITR upload and verification, API enabled commercial and consumer bureau fetch and due diligence using CICs, fraud checks, Hunter checks through APIs, among others.Non-tax benefits extended for 3 years in case of an upward change in status of MSMEs; Trade Receivable Discounting System (TReDS) to facilitate the financing of trade receivables of MSMEs from corporate and other buyers including government departments and public-sector undertakings (PSUs) through multiple financiers electronically. Collateral free loans up to Rs. 500 lakhs (from April 1, 2023) with guarantee coverage up to 85% through CGTMSE. Exemption from global tenders for procurement up to Rs. 200 crores. Integration of Udyam Portal with the National Career Service (NCS) to enable registered MSMEs to search for jobseekers. Relief under Vivad se Vishwas – I, including a refund of 95% of performance security, bid security, and liquidated damages for MSMEs, and relief for debarred MSMEs due to contract execution defaults. Samadhaan Portal introduced from October 30, 2017 for monitoring outstanding dues to MSEs from buyers of goods and services.