The Egrow Foundation and ASSOCHAM collaborated to produce a comprehensive study on “MSMEs Facing Challenges in Doing Business”. Members of several ASSOCHAM state units participated in a series of in-depth interviews that culminated in the study. These exchanges shed important light on the regional difficulties MSMEs encounter, especially about their distinctive goods, market conditions, and operational settings. The study provided a thorough grasp of the complex problems MSMEs faced by fusing quantitative data from the survey of more than 150 businesses with qualitative input from almost 120 industry stakeholders.

This report emphasized the need for creative financial solutions and urged banks to remove unnecessary credit costs and increase openness in loan approval procedures. Other recommendations include promoting mobile banks to assist informal micro-enterprises, expanding Small Finance Banks (SFBs) to better serve rural and semi-urban areas, and introducing bonds and mutual funds tailored to MSMEs to improve financial liquidity.

According to an ASSOCHAM-EGROW study, the report also suggests lowering the corporate income tax rate for MSMEs from 25% to 15% and simplifying the Goods and Services Tax (GST) system to make compliance easier.

In addition to outlining a roadmap for MSMEs’ role in Viksit Bharat, the report recommended reducing the TDS (Tax Deducted at Source) burden by restricting tax deductions to necessary payments and putting in place a single, turnover-based tax system for specific MSMEs.

According to the analysis, India’s nominal GDP is likely to rise from $3.5 trillion to $22.8 trillion over the next several decades, indicating a fundamental economic shift. A growing and active workforce, expected to reach 76.9 crore people by 2047, will be the primary driver of a notable increase in per capita GDP from $2,485 to $14,000.

Regarding skill development, the paper suggests strengthening ties between MSMEs and universities and upgrading the Skill India Mission to state-specific training initiatives. To boost MSME clusters around the country, it also promoted the development of integrated infrastructure townships, which would house training facilities, financial institutions, and testing facilities. The research also argued for the creation of an MSME and entrepreneurship-focused university to foster R&D and innovation by fusing academic knowledge with real-world business acumen. Another crucial issue is effective communication.

With almost 30% of GDP, 45% of industrial output, and 46% of exports in fiscal year 2024, MSMEs are a vital component of India’s economy.

To handle interstate difficulties and expedite the implementation of the policy, the government ought to set up a special MSME Coordination Council. Furthermore, creating an MSME Policy Index would offer a useful instrument for assessing and enhancing state-level performance in the implementation and adherence of MSME policies.

Priyanka Dutta