Medium Enterprises as Growth Engines

Context:

NITI Aayog recently released a visionary report titled “Designing a Policy for Medium Enterprises”. The report lays out a detailed roadmap to unlock the untapped potential of medium enterprises, identifying them as critical to India’s ambition of becoming a globally competitive, self-reliant economy under the Viksit Bharat @2047 vision.

Structural imbalance in the MSME Ecosystem:

The Micro, Small, and Medium Enterprises (MSME) sector is a key pillar of the Indian economy:

Contributes 29% to India’s GDP,
Accounts for 40% of exports, and
Employs over 60% of the workforce.

However, the sector suffers from a severe structural imbalance:

97% of registered MSMEs are micro enterprises,
2.7% are small enterprises, and
Only 0.3% is medium enterprises.

Despite being the smallest in number, medium enterprises contribute nearly 40% of MSME exports, highlighting their disproportionate impact and latent potential.

Key Challenges for micro enterprises:

The report outlines a set of systemic barriers limiting the growth of medium enterprises:

Limited access to tailored financial products and formal credit.
Slow adoption of Industry 4.0 technologies due to lack of infrastructure and awareness.
Inadequate R&D support and lack of platforms to foster innovation.
Absence of sector-specific testing and certification infrastructure.
Skills mismatch between training programmes and real enterprise needs.
Fragmented access to information, compliance guidance, and government schemes.

Six-Pillar Policy Framework for Empowerment:

To address these challenges, the report outlines a comprehensive policy framework with targeted interventions across six priority areas:

1. Tailored Financial Solutions: Introduction of a working capital financing scheme linked to enterprise turnover and a ₹5 crore credit card facility at market rates.

2. Technology Integration and Industry 4.0: Upgradation of existing Technology Centers into sector-specific and regionally customized India SME 4.0 Competence Centers.

3. R&D Promotion Mechanism: Establishment of a dedicated R&D cell within the Ministry of MSME to promote R&D in medium enterprises.

4. Cluster-Based Testing Infrastructure: Development of sector-focused testing and certification facilities to ease compliance and enhance product quality.

5. Custom Skill Development: Alignment of skilling programmes with enterprise-specific needs by region and sector.

6. Centralized Digital Portal: Creation of a dedicated sub-portal within the Udyam platform to provide scheme discovery tools, compliance support, and AI-based assistance.

Conclusion:

The report emphasizes that unlocking the potential of medium enterprises requires a shift toward inclusive policy design and collaborative governance. With strategic support in finance, technology, infrastructure, skilling, and information access, medium enterprises can emerge as the drivers of innovation, employment, and export growth. This transformation is pivotal to realizing the vision of Viksit Bharat @2047.