MSMEs form the backbone of the Indian economy, contributing significantly to employment, exports, and overall economic development. However, despite their importance, these enterprises encounter a range of hurdles that hinder their growth and sustainability. The primary aim of this report is to explore these challenges and offer actionable recommendations for addressing them. Through extensive surveys and interviews conducted by ASSOCHAM and EGROW, we have identified several key issues that impact MSMEs at both national and state levels.

The challenges confronting MSMEs can be broadly categorized into the following areas: operational issues, financial constraints, labor-related problems, tax compliance, and market access (both input and output). These challenges not only increase the cost of doing business but also create significant hurdles for resource-constrained MSMEs.

While many challenges are common across MSMEs nationwide, there are also state-specific issues that further complicate the business environment for these enterprises. Addressing the challenges faced by MSMEs requires the creation of a conducive ecosystem that fosters growth, innovation, and competitiveness. However, this is a herculean task given the heterogeneous nature of MSMEs in India. MSMEs range from micro-enterprises to technologically advanced small and medium businesses, each with its own set of needs and challenges. Moreover, these enterprises are scattered across the country, making it difficult to implement uniform policies that address the unique challenges of each region.

One of the major barriers to creating a conducive ecosystem is the lack of coordination between the Central Government and state governments. This disconnect leads to inconsistent implementation of schemes and programs, which ultimately hampers the effectiveness of government initiatives designed to support MSMEs. Furthermore, there is a lack of awareness among MSME owners about the various schemes available to them. As a result, many MSMEs fail to access the resources they need to grow and develop.

The Report also proposes overarching recommendations aimed at creating a conducive environment that fosters long-term sustainability and growth for MSMEs. The objective of the study is to ensure efficient, productive and cost-effective MSMEs that can compete succesfully in the world and get the integrated into the global value chain.