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Ex Finance Commission Head On MSMEs' Role In Becoming 'Viksit Bharat'

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  Published in Business and Finance on Sunday, September 21st 2025 at 22:39 GMT by NDTV
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The Vital Role of MSMEs in Building a Developed India – A Recap of the NDTV Emerging Business Delhi Chapter Conclave

On a brisk morning in Delhi, the NDTV Emerging Business Delhi Chapter convened a high‑profile conclave to discuss the “MSME’s role in making India a developed nation.” The event drew a mix of policymakers, industry leaders, academics, and budding entrepreneurs, all eager to hear from a distinguished speaker: Dr. N. K. Singh, the former head of the Finance Commission of India. In a speech that spanned nearly an hour, Dr. Singh painted a comprehensive picture of the current state of micro, small, and medium enterprises (MSMEs), the challenges they face, and the policy levers that could unlock their full potential.

1. MSMEs: The Engine of India’s Economy

Dr. Singh began by underscoring the sheer scale of MSMEs in India. These enterprises, which number more than 63 million, contribute roughly 30 % of the country’s gross domestic product (GDP) and are the largest source of employment, offering jobs to about 100 million people. While these figures have remained fairly constant over the last decade, the growth trajectory has stalled due to a host of structural bottlenecks.

He highlighted that MSMEs are not just job creators; they also play a pivotal role in supply chains, often acting as intermediaries that convert raw materials into finished goods for both domestic and international markets. By nurturing this segment, India can diversify its manufacturing base, reduce dependence on large conglomerates, and achieve a more resilient economy.

2. The Three Pillars of MSME Growth

a. Access to Finance

One of the most pressing issues, according to Dr. Singh, is the persistent difficulty MSMEs face in securing timely, affordable credit. Traditional banks, burdened by stringent collateral requirements and long approval timelines, are ill‑suited to the fast‑moving needs of small businesses. While schemes such as the Pradhan Mantri Mudra Yojana (PMMY) and the Stand Up India initiative have expanded credit availability, many MSMEs still find themselves outside the purview of these programs.

Dr. Singh called for a multi‑layered financing ecosystem that combines government guarantees, fintech‑driven lending platforms, and sector‑specific venture capital. He urged the government to expand credit guarantee schemes to cover up to 75 % of the loan amount for MSMEs, thereby encouraging banks to lend more aggressively. Additionally, he advocated for the development of a dedicated MSME bond market, which could provide a stable funding source for large‑scale infrastructure projects that benefit small enterprises.

b. Regulatory Simplification and Digital Adoption

Another key challenge identified was the cumbersome regulatory environment that hampers MSME growth. Multiple layers of compliance – from tax registration and labor laws to environmental clearances – create a bureaucratic labyrinth. Dr. Singh emphasized the need to streamline licensing processes, adopt a single‑window clearance system, and provide digital portals that allow enterprises to submit and track applications in real time.

Digitalization is a central theme in Dr. Singh’s vision. He underscored the transformative power of technology in boosting productivity, facilitating market access, and ensuring transparency. By encouraging the adoption of e‑commerce platforms, digital payment systems, and cloud‑based inventory management, MSMEs can reach broader markets and operate more efficiently. The government’s Digital India initiative, he noted, should be leveraged to provide subsidized digital infrastructure and skill development for MSME owners and their workforce.

c. Skill Development and Innovation

Skill gaps, both technical and managerial, were cited as another impediment to MSME growth. Dr. Singh pointed out that many owners lack the knowledge required to navigate complex supply chains, adhere to quality standards, and innovate. He proposed the creation of “skill hubs” that partner with industry associations, technical institutes, and corporate partners to deliver tailored training programs. These hubs would not only equip employees with job‑specific skills but also impart entrepreneurship best practices.

Innovation, he argued, should be fostered through a mix of policy incentives and collaborative platforms. MSMEs would benefit from access to research‑development centers, incubation facilities, and intellectual property support, allowing them to design differentiated products and capture higher value‑added segments of the market.

3. Policy Recommendations and Forward‑Looking Initiatives

Dr. Singh wrapped up his speech by outlining a strategic roadmap for MSMEs, anchored on three overarching objectives:

1. Financial Inclusivity – Expand the credit guarantee fund, facilitate micro‑credit through fintech, and develop a specialized MSME bond market.
2. Regulatory Ease – Consolidate all licensing procedures into a single digital portal, simplify tax compliance with a flat tax regime for micro‑enterprises, and introduce a “fast‑track” compliance window for MSMEs engaged in export.
3. Digital and Skill Ecosystem – Offer subsidized broadband and cloud services, integrate e‑commerce platforms, and establish industry‑driven skill hubs.

He also highlighted the upcoming National Manufacturing Policy, which will, he argued, serve as a catalyst for MSME participation in the “Made in India” value chain. By setting target sharepoints for MSME engagement in key sectors—such as textiles, food processing, and renewable energy—policymakers can ensure that small enterprises are not left on the sidelines.

4. Take‑away Messages for Stakeholders

• For Policy Makers: The focus must shift from reactive to proactive. While current schemes are beneficial, a coordinated, multi‑layered approach that aligns finance, regulation, and skills is essential.
• For Industry Leaders: Collaboration with MSMEs—whether through joint ventures, supply chain partnerships, or mentorship—can unlock new revenue streams and foster innovation.
• For Entrepreneurs: Leveraging digital tools, securing financing through alternative avenues, and continuously upskilling will determine long‑term viability.

5. Additional Context from Linked Resources

The event’s official press release and the NDTV Emerging Business page provide further details about the agenda, which included panel discussions on the impact of COVID‑19 on MSMEs, case studies from successful entrepreneurs, and a showcase of fintech solutions tailored to small enterprises. A link to the Finance Commission’s final report, released in 2023, offers a deeper dive into the macroeconomic framework that underpins the recommendations shared by Dr. Singh.

6. Closing Thoughts

Dr. N. K. Singh’s address at the NDTV Emerging Business Delhi Chapter Conclave served as a clarion call for a renewed commitment to MSMEs. By championing accessible finance, streamlined regulations, digital empowerment, and robust skill development, India can harness the full potential of its micro‑, small‑, and medium‑enterprises. Doing so will not only accelerate economic growth but also foster inclusive development, ensuring that the benefits of a developing economy reach every corner of the nation.