Micro, Small and Medium Enterprises (MSMEs continue to remain the foundation of India’s industrial economy, playing a central role in manufacturing, exports, employment generation and inclusive growth, according to the Economic Survey 2025-26 tabled in Parliament by Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman.
The Survey underscores that MSMEs contribute 35.4 per cent of manufacturing output, 48.58 per cent of total exports, and 31.1 per cent of GDP. With more than 7.47 crore enterprises employing over 32.82 crore people, the sector is the second-largest employer after agriculture. Globally, MSMEs account for nearly 90 per cent of businesses and generate over half of total employment, highlighting their structural importance to economic systems worldwide.
As India’s manufacturing sector seeks deeper integration with global markets, the Survey emphasises that MSMEs are indispensable for supply-chain participation, local value addition, regional dispersal of industrial activity, and employment-intensive growth.
MSME Credit Anchors Industrial Lending Momentum
The Economic Survey highlights that MSME credit has remained on a strong growth trajectory, supported by targeted government interventions aimed at improving access to finance and easing structural credit constraints.
Notably, MSME lending emerged as the primary driver of industrial credit growth during the first half of FY 2025-26, with year-on-year credit expansion to MSMEs significantly exceeding that of large industries. This trend reflects both improved financial intermediation and sustained demand for working capital and investment financing within the sector.
The Survey also points to a sharp expansion in SME participation in public equity markets, driven by favourable market conditions, regulatory facilitation, and increasing participation by retail investors through digital platforms.
Equity Support and Innovation Ecosystem
The Self-Reliant India (SRI) Fund, launched to provide ₹50,000 crore in equity support to MSMEs, has assisted 682 enterprises through investments amounting to ₹15,442 crore as of 30 November 2025. The Fund addresses a long-standing equity financing gap, particularly for growth-stage and innovation-driven MSMEs.
Innovation is being institutionalised through the MSME-Innovative component, which supports incubation, design interventions, and intellectual property protection, enabling enterprises to move up the value chain and strengthen competitiveness.
MSMEs and Global Manufacturing Integration
The Survey notes that India accounted for approximately 2.9 per cent of global manufacturing GVA and 1.8 per cent of global merchandise exports in 2024, indicating significant untapped potential to expand its global manufacturing footprint.
A calibrated deepening of India’s participation in global supply chains, particularly in labour-intensive and assembly-linked sectors, is identified as a key pathway for advancing job-rich industrialisation within the broader Viksit Bharat@2047 vision. MSMEs are expected to play a pivotal role in this transition due to their flexibility, employment intensity, and capacity to integrate into regional and global value chains.
Manufacturing Strategy and Way Forward
From an advanced manufacturing perspective, the Economic Survey highlights the growing importance of R&D-intensive and technology-driven MSMEs in enhancing productivity, quality, and export competitiveness. Operating in global markets requires enterprises to meet stringent quality standards, thin margins, and dynamic delivery timelines, underscoring the need for a supportive and efficient ecosystem.
The Survey further notes that complementary growth drivers, such as infrastructure development, capital markets, digital governance, and services exports, can significantly enhance MSME incomes and resilience. In this context, it stresses the importance of anchoring MSME development within a National Manufacturing Mission, focused on sustained capability building, scale efficiency, innovation, and competitiveness.
The Economic Survey concludes that strengthening MSMEs is not merely a sectoral priority, but a strategic imperative for India’s industrial transformation, employment generation, and long-term economic resilience. (Source: PIB PR ID 2219984)
Economic Survey of India 2025-26 dated 29/01/2026