Kurukshetra May, 2025

Science & Technology Interventions for MSMEs

Key Science & Technology Initiatives

Expansion of Technology Development Centers

• The Ministry of MSME runs 33 Technology Development Centers across sectors, aiding MSMEs in design, manufacturing, skill development, and access to advanced technologies. New centers are being developed under a Build-Operate-Transfer (BOT) PPP model to expand reach, offering services like job work, precision production, and specialized tool manufacturing.

Scheme for New Technology Centers and Extension Centers

• It aims to establish 20 Technology Centers and 100 Extension Centers on a hub-and-spoke model, bringing advanced technologies like AI, AR, VR, IoT, and Robotics to grassroots and remote areas.
• So far, 25 Extension Centers have been commissioned, training over 72,000 trainees and supporting 1,440 MSMEs.

Overall Impact

• Science and technology interventions are enhancing MSMEs’ competitiveness, innovation, and global recognition by fostering an ecosystem that drives innovation, employment, rural upliftment, and inclusive growth. Consequently, the MSME sector is evolving from basic economic units into innovation hubs and key drivers of sustainable development in India’s economy.

Importance of MSMEs in the Economy

• MSMEs (Micro, Small, and Medium Enterprises) are vital to economic growth, acting as engines for multifaceted industrialization, especially in backward and rural regions.
• Globally, MSMEs constitute about 90% of businesses, generate 60-70% of employment, and contribute nearly 50% of GDP.
• In India, there are 6.23 crore registered MSMEs as of April 2025, employing 26.66 crore people.
• MSMEs contribute about one-third of India’s GDP and over 45% of exports.
• The sector spans multiple industries: food processing, textiles, auto components, hospitality, manufacturing (including space components for Chandrayaan).
• Around 70% of MSMEs are in services, with micro-enterprises dominating the sector.

Evolving Definition of MSME

• From April 1, 2025, MSME definitions were expanded, doubling turnover limits and increasing investment ceilings 2.5 times.
• Earlier classifications were based solely on investment; since 2020, MSMEs are defined using dual criteria: investment and turnover.
• The government simplified registration through Udyam Registration Portal (URP) and Udyam Assist Platform (UAP), making it easier for smaller enterprises to formalize.
• Formalization increased MSME registrations from 1.65 crore (April 2023) to 6.23 crore (April 2025).
• Top states with maximum MSME registrations include Maharashtra, Uttar Pradesh, and Tamil Nadu.

Strengthening MSMEs: Government Initiatives

• MSME growth depends on skill development, affordable finance, technology adoption, marketing, and infrastructure.
• The 2025 Budget enhanced MSME classification thresholds to prevent penalizing growth and to include larger enterprises in MSME benefits.
• This broadening promotes inclusivity, competitiveness, and growth.

MSME Finance Framework

• MSMEs are a key segment of Priority Sector Lending (PSL), with banks required to allocate 40% of Adjusted Net Bank Credit (ANBC) to PSL and 7.5% specifically to Micro Enterprises.
• RBI targets 20% year-on-year credit growth to MSEs and increased lending accessibility.
• Loans up to ₹10 lakh to MSEs are collateral-free.
• RBI is considering a move to remove foreclosure charges on floating-rate loans to enable MSMEs to switch lenders and benefit from lower interest rates.

Credit Guarantee Scheme (CGS)

• CGS protects lenders from borrower defaults by providing guarantees via Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).
• The guarantee limit increased from ₹5 crore to ₹10 crore from April 2025.
• Guarantee coverage varies: up to 90% for women-owned enterprises, 85% for SC/ST entrepreneurs, 80% for enterprises in North-East and J&K, and 75% for others.
• Since 2000, CGS has given 71 lakh guarantees worth ₹4.27 lakh crore; in just 2023-2025, 44 lakh guarantees worth ₹5.02 lakh crore were given.
• The reduction of guarantee fees by 50% in 2023 greatly boosted scheme uptake.

Key Schemes Supporting MSMEs

• Prime Minister’s Employment Generation Programme (PMEGP):
• Focuses on self-employment via micro-enterprises in non-farm sectors.
• Provides up to 95% bank finance with subsidies up to 35%.
• Assisted over 10 lakh enterprises, generating 83 lakh jobs.
• Pradhan Mantri Mudra Yojana (PMMY):
• Offers collateral-free loans for income-generating activities.
• Disbursed over 51.67 crore loans worth ₹32.61 lakh crore since 2015.
• PM Vishwakarma Scheme:
• Launched in 2023 to support traditional artisans with skill upgradation, toolkits, digital incentives, and concessional loans.
• Nearly 30 lakh beneficiaries registered within 18 months; 4 lakh loans sanctioned.
• Offers loans up to ₹3 lakh at concessional 5% interest, with government subvention.
• Self Reliant India Fund:
• Set up under Atmanirbhar Bharat with ₹10,000 crore government contribution plus ₹50,000 crore private equity.
• Provides equity support to growth-oriented MSMEs through venture capital.

Key Takeaways

• MSMEs are critical for inclusive growth, employment, and exports in India.
• Recent policy reforms have broadened the definition of MSMEs, enabling more enterprises to avail benefits.
• Access to affordable and collateral-free finance, combined with credit guarantees, is boosting MSME growth and formalization.
• Government schemes like PMEGP, PMMY, and PM Vishwakarma provide comprehensive support from credit to skill enhancement.
• Upcoming RBI guidelines on foreclosure charges can further improve credit flexibility for MSMEs.
• The expansion of the Credit Guarantee Scheme reflects the government’s commitment to easing financing constraints for MSMEs.

Current State of Technology in MSMEs

Key Challenges in Technology Adoption

• Financial Constraints: Limited access to affordable credit, high capital costs, and thin operating margins discourage long-term investments in new technologies or machinery
• Lack of Awareness and Digital Literacy: Many MSME owners and workers are unaware of relevant technologies and their benefits. Low digital literacy further hinders the adoption of digital tools and platforms.
• Limited Market Intelligence: Inadequate access to data on consumer behavior, demand patterns, and global market trends restricts innovation and competitiveness.
• Skill Gaps and Workforce Limitations: There is a shortage of professionals skilled in emerging technologies like AI, automation, and data analytics. Additionally, limited hands-on training hampers workforce upskilling.
• Obsolete Equipment and Low Productivity: Due to the high cost of modern machinery, many MSMEs depend on outdated or second-hand equipment, affecting efficiency and product quality.
• Inadequate Infrastructure: Poor internet access, unreliable power supply, and lack of digital infrastructure in rural and semi-urban areas pose significant barriers to technology adoption.
• Misalignment and Complexity of Tech Solutions: Many off-the-shelf technologies are not tailored to MSME needs, and limited in-house capacity prevents effective customization and integration.
• Low Penetration of Emerging Technologies: Advanced solutions like AI, IoT, AR/VR, 3D printing, and Industry 4.0 remain underutilized due to high costs, complexity, and lack of awareness.

Emerging Technologies and their Impact on MSMEs

Government Interventions

• MSME Technology Centres (TCs): Provide tools, product development support, and skill training through 15 new centres established under the World Bank-aided TCSP.
• ZED Certification Scheme: Promotes Zero Defect Zero Effect manufacturing by encouraging highquality production with minimal environmental impact.
• PRISM Scheme: Supports grassroots innovation and facilitates the commercialization of ideas by individuals, startups, and MSMEs.
• Extension Centres (ECs): 100 ECs are being set up to deliver Technology Centre services to last-mile MSMEs across the country.
• CGTMSE: Eases access to credit by offering collateral-free loans to micro and small enterprises through credit guarantees.
• Digital MSME Scheme: Facilitates adoption of cloud computing and ICT tools to enhance competitiveness and digital readiness.
• MSME Champions Portal: Acts as a one-stop platform for grievance redressal, access to government schemes, and real-time advisory support.

Way Forward

Conclusion

Technology adoption is no longer a luxury but a necessity for the survival and growth of MSMEs. While various government initiatives have laid the foundation, a more targeted, inclusive, and collaborative approach is required to overcome existing bottlenecks. By enhancing access to finance, building digital infrastructure, upskilling the workforce, and fostering innovation ecosystems, India can unlock the full potential of its MSME sector and make it globally competitive in the digital era.