The Micro, Small and Medium Enterprises (MSME) sector is a significant contributor to the economic and social development of the country as it contributes 29% to GDP (2021-22), 36% to Manufacturing Output (2021-22) and 44% to the exports (2022-23). It is the second largest employer after Agriculture and employs about 11.1 crores people spread across manufacturing, trade, and service sectors. So far there are 6.45 crore (as on 11 June 2025) MSMEs have been registered (including Informal Micro Enterprise registered on Udyam Assist Platform).

The sector has a huge potential of fostering entrepreneurship, steering economic growth, and generating large employment opportunities. However, it continues to face challenges with respect to access to credit, technology and markets, infrastructure bottlenecks, delayed payments etc. Furthermore, the pandemic further hurt the MSMEs as it affected their liquidity, aggravated NPAs, increased unsold inventory and disrupted supply chain.