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MSME policy making challenges
Here is a structured response on the challenges faced by Indian policymakers in building effective export promotion policies for MSMEs, along with examples of successful interventions by industry and geography
Challenges in Building Effective MSME Export Policies in India
NITI Aayog highlights that medium enterprises, though only 0.3% of registered MSMEs, contribute nearly 40% of MSME exports, making them pivotal to India’s global competitiveness. However, policymakers face several challenges.
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Only 37% of medium enterprises can obtain formal loans; general MSME frameworks fail to meet their scale and working-capital needs.
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Existing credit schemes are mostly skewed to micro/small MSMEs; only 8 out of 250+ schemes are available for medium enterprises, with just one focused on credit.
Limited Access to Tailored Finance
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A staggering 82% of medium enterprises lack access to Industry 4.0 tools (AI, IoT, automation), limiting productivity and export potential
Technology-Adoption Deficit
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Only 22% engage in R&D, versus 60% in larger firms; sector-specific testing and certification facilities are largely absent.
Weak R&D and Testing Infrastructure
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Around 88% of medium enterprises aren't part of any government skills/training program; curriculums are poorly aligned with enterprise needs.
Skill Gaps & Training Mismatch
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Over 90% are unaware of key schemes (RAMP, ZED, GeM); fragmented information and poorly integrated portals hamper uptake.
Low Scheme Awareness and Digital Reach
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Burdensome inspections across labour, environment, health, and safety increase costs and disincentivise scaling.
High Compliance & Regulatory Burden
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