The report highlights the structural imbalance within the MSME sector, the critical role of medium enterprises, and proposes targeted policy interventions to harness their untapped potential.

• The MSME sector (Refer info graphic for Classification) contributes nearly 29% to the GDP, accounting for 40% of total exports, and providing employment to over 60% of the workforce.
• However, the sector is heavily skewed toward micro enterprises, which make up about 97% of all registered MSMEs, followed by small enterprises (2.7%) & medium enterprises (0.3%).
• Despite constituting just 0.3% of the MSME base, medium enterprises contribute nearly 40% of MSME exports.

Challenges Faced by Medium Enterprises

• Outdated Technology: 82% of Medium Enterprises do not have advanced technologies (Industry 4.0 – AI, IoT, etc.) integrated into their business operations.
• Low Utilization of Skill Development Schemes: 88% of Medium Enterprises are not availing themselves of any government skill development or training schemes.
• Funding: In India, only 37% of Medium Enterprises are able to secure loans (World Bank Indian MSME Financing Report).
• Compliance burden due to the numerous inspections from various authorities, including labour inspectors, health inspectors, etc.
• Inadequate R&D: Only 22% of medium enterprises engage in R&D, compared to 60% of large enterprises.