A recent report by NITI Aayog has noted improvement in MSMEs’ access to formal credit, saying that between 2020 and 2024, the share of micro and small enterprises accessing credit through scheduled banks rose to 20 per cent from 14 per cent, while medium enterprises saw an increase to 9 per cent from 4 per cent.

Despite these improvements, the report reveals that a substantial credit gap remains. Only 19 per cent of MSME credit demand was met formally by FY21, leaving an estimated Rs 80 lakh crore unmet.

Advertisement

The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) has expanded significantly, but still faces significant limitations, NITI Aayog said.

To bridge the credit gap and unlock inclusive, scalable finance for MSMEs, the report calls for a revamped CGTMSE, supported by institutional collaboration and more targeted services.

It also highlighted the pressing issue of skill shortages within the MSME sector. “A large portion of the workforce lacks formal vocational or technical training, which hampers productivity and limits the ability of MSMEs to scale effectively,” the report mentioned.

Many MSMEs also fail to invest sufficiently in research and development (R&D), quality improvement, or innovation, making it difficult to stay competitive in national and global markets, it highlighted.

The report further points out that MSMEs face barriers in adopting modern technologies due to unreliable electricity supply, weak internet connectivity, and high implementation costs.

NITI Aayog said that despite state government schemes designed to support technological advancement in MSMEs, many enterprises are either unaware of them or unable to access them.