Over 50% of Indian MSMEs See Double-Digit Growth Post-COVID: Survey

New Delhi, Sep 21 (KNN) A new survey report has shed light on the significant strides made by India’s Micro, Small, and Medium Enterprises (MSMEs) in the aftermath of the COVID-19 pandemic. 

Conducted by UGRO Capital, a leading MSME-focused non-banking financial company (NBFC), in collaboration with Dun & Bradstreet, the MSME Sampark Report 2024 analysed over 39,000 enterprises across seven key sectors. 

The study covered light engineering, food processing, electrical equipment, chemicals, auto components, hospitality, and healthcare over a three-year period, from May 2021 to March 2024.

The report revealed that more than 50 per cent of the MSMEs experienced a year-over-year sales growth exceeding 10 per cent during the study period, signalling a strong post-pandemic recovery. 

These enterprises, all with an annual turnover of less than Rs 100 crore, have benefited from improving economic conditions and targeted support from financial institutions.

A critical factor contributing to this recovery has been improved access to credit. The survey highlighted a notable rise in the proportion of working capital loans within the total secured debt of MSMEs, from 66 per cent in Q1 2023 to 71 per cent by Q4 2023. 

This shift underscores the growing confidence among lenders in the sector, particularly in providing essential working capital to help MSMEs stabilise and grow.

UGRO Capital’s Founder and Managing Director, Shachindra Nath, praised the improved credit access, stating, “With enhanced formalisation, credit access, and support from financial institutions, MSMEs are leading the way toward a stronger, more prosperous India.”

The report also indicated an improvement in MSMEs’ debt-to-turnover ratios, particularly in sectors like light engineering, food processing, hospitality, and healthcare. 

This trend was more pronounced for firms with turnovers under Rs 5 crore. Meanwhile, larger turnover firms in sectors such as electrical equipment, chemicals, and auto components also saw steady growth, though at varying levels.

Micro-enterprises also witnessed increased access to larger loans. 

The share of regular term loans for MSMEs rose sharply from 57 per cent in 2020 to 88 per cent in 2023. Similarly, the percentage of larger-ticket loans exceeding Rs 10 lakhs grew from 19 per cent to 40 per cent during the same period.

Avinash Gupta, MD & CEO of Dun & Bradstreet India, highlighted the need for further reforms, noting that while MSMEs contribute around 30 per cent to India’s GDP, their share of non-food credit remains relatively low at around 6 per cent. 

However, he expressed optimism about government-led digitalization initiatives, which are expected to boost MSME access to credit, technology, and markets in the coming years.

(KNN Bureau)