NITI Aayog Roadmap for Enhancing MSME Efficiency

NITI Aayog has released a report titled “Achieving Efficiencies in MSME Sector through Convergence of Schemes”, outlining a strategic framework to streamline government support for Micro, Small and Medium Enterprises (MSMEs).

Rationale for Scheme Convergence

• Multiplicity of Schemes: The Ministry of MSME administers 18 schemes covering credit, skill development, marketing, innovation, technology upgradation and infrastructure.
• Challenges Identified: Overlapping objectives, fragmented implementation across ministries, duplication of efforts, inefficiencies, and limited outreach to beneficiaries.
• Need for Reform: Lack of coordination dilutes the impact of public resources and complicates access for MSMEs.

Two-Pronged Convergence Strategy

To address these challenges, the report recommends a two-pronged convergence strategy.

• Information Convergence:
  • Integrated Data Systems: Integration of government-generated data at central and state levels.
  • Governance Improvement: Enables informed decision-making, better coordination and stronger monitoring.
  • Evidence-Based Policy: Facilitates data-driven governance and targeted interventions
• Process Convergence:
  • Alignment of Schemes: Rationalisation and alignment of schemes with similar objectives.
  • Operational Streamlining: Reduction of redundancies through merging schemes and combining common components.
  • Inter-Ministerial Collaboration: Enhanced coordination across ministries and states for efficient service delivery

Key Recommendations of the Report

• Centralised Digital Portal for MSMEs:
  • Proposal for an AI-powered centralised platform integrating MSME schemes, compliance, finance and market intelligence.
  • Features: AI chatbots, dashboards and mobile access for real-time assistance.
• Convergence of Cluster Development Schemes:
  • The report recommends merging the Scheme of Fund for Regeneration of Traditional Industries (SFURTI) with the MSE–Cluster Development Programme (MSE-CDP) to create a more streamlined cluster development framework.
  • Creation of a dedicated sub-scheme for traditional industries, unified governance under MSE-CDP, and consolidated funding.
• Convergence of Skill Development Programmes:
  • Skill development initiatives should be reorganized into a three-tier structure focusing on:
    • Entrepreneurship and business skills
    • MSME technical skills
    • Training for rural and women artisans
• Convergence of Procurement and Marketing Scheme (PMS) with International Cooperation (IC):
  • To simplify MSME access to marketing assistance and expand market reach, the report recommends merging PMS and IC under a Unified Marketing Assistance Wing.
  • Domestic Component: Facilitates MSME participation in national exhibitions, trade fairs and buyer-seller meets.
  • International Component: Supports global market access through overseas trade fairs, B2B events and buyer-seller meets
• Innovative Financing:
• • To streamline innovation financing, the report recommends integrating ASPIRE with the MSME Innovative Scheme under a dedicated agro-rural enterprise category.

About MSMEs

• As per the provisions of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, MSMEs in India are classified based on investment in plant and machinery and annual turnover.

Status of MSMEs in India

• Future Growth Outlook: The total number of MSMEs is projected to increase from 6.34 crore to nearly 7.5 crore, growing at a Compound Annual Growth Rate (CAGR) of 2.5%.
• Growth Performance: Between 2000 and 2016, the industrial sector grew at an average rate of 7.6%, while MSMEs recorded a higher average growth of 8.6%.
• Contribution to GDP: Between 2017 and 2023, the MSME sector consistently contributed 27% to 30% of India’s Gross Domestic Product (GDP), highlighting its central role in economic development.
• Employment Generation: Employs approximately 62% of India’s workforce (Nearly 28.13 crore), making it the second-largest after agriculture.
• Export Contribution: Account for around 45% of India’s total exports.
  • Exports Growth: ₹3.95 lakh crore in 2020-21 to ₹12.39 lakh crore in 2024-25
• Sectoral Composition: As of October 2024, about 25% of registered MSMEs operate in the manufacturing sector, while the remaining 75% are engaged in service activities.

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Government Initiatives for MSMEs

• PM Vishwakarma Scheme:
  • Announced in the Union Budget 2023–24, the Scheme aims to enhance the quality, scale, and market integration of products and services offered by artisans and craftspeople (Vishwakarmas) by linking them to domestic and global value chains.
• Udyam Registration Portal
  • Launched on 1 July 2020, the Udyam Registration Portal provides a free, paperless, and self-declaration-based registration mechanism for MSMEs, encouraging formalisation.
  • The portal enables seamless migration from Udyog Aadhaar Memorandum and Entrepreneurship Memorandum-II, without requiring document uploads, thereby simplifying compliance
  • Udyam Assist Platform: To integrate informal micro-enterprises, the Udyam Assist Platform was launched in November 2023, enabling access to benefits such as Priority Sector Lending.
• Prime Minister’s Employment Generation Programme (PMEGP):
  • PMEGP is a credit-linked subsidy scheme aimed at promoting self-employment through the establishment of micro-enterprises in the non-farm sector.
• Scheme of Fund for Regeneration of Traditional Industries (SFURTI):
  • Launched in 2005–06, SFURTI seeks to organise traditional artisans into clusters to promote product development, diversification, value addition, and sustainable income growth.
• Public Procurement Policy for Micro and Small Enterprises (MSEs):
  • Notified in 2012, the policy mandates 25% of annual procurement by Central Ministries, Departments, and CPSEs from MSEs.
• Budgetary Expansion: Government expenditure on the MSME sector rose sharply from ₹6,717 crore in 2019–20 to ₹23,168 crore in 2025–26, reflecting stronger policy focus and financial commitment