Parliamentary Panel Calls For Innovation-Driven, Outcomes-Based MSME Framework

New Delhi, Feb 13 (KNN) The Parliamentary Standing Committee for Finance has underlined the critical role of Micro, Small and Medium Enterprises (MSMEs) as the backbone of the Indian economy and called for a more comprehensive, innovation-led strategy to strengthen the sector.

The Committee observed that a holistic framework encompassing finance, technology, capacity building and infrastructure is essential to ensure sustainable and competitive growth of MSMEs.

The Committee noted the expansion of the Credit Guarantee Scheme, with the ceiling raised from Rs 5 crore to Rs 10 crore from April 1, 2025. Between 2022–25, additional guarantees worth Rs 6.12 lakh crore were extended to MSEs, benefiting over 56 lakh units and boosting credit flow.

The Committee also took note of the ‘Raising and Accelerating MSME Performance’ (RAMP) scheme, which promotes Centre–State collaboration through Strategic Investment Plans (SIPs). The scheme targets 5.5 lakh MSMEs over five years, with more than four lakh enterprises already impacted.

To boost receivables financing, mandatory onboarding on TReDS was expanded on November 7, 2024. Companies with turnover above Rs 250 crore and CPSEs must now register. Five TReDS platforms have been approved.

The Committee noted that under RBI norms, loans turn to NPAs only after 90 days of overdue, with early stress flagged through SMA categories, and said no further NPA relaxation for MSMEs is needed. 

It highlighted supportive measures such as 75 percent risk weights under the retail portfolio, higher exposure limits up to Rs 7.5 crore, lower provisioning for standard MSME assets, and Trade Relief Measures, 2025, permitting moratoriums without asset downgrade during global trade disruptions.

Referring to a report by NITI Aayog in collaboration with the Institute for Competitiveness, titled ‘Enhancing MSMEs Competitiveness in India,’ the Committee noted that systemic reforms in financing, skilling, innovation and market access are essential to unlock the sector’s full potential.

On formalisation and market access, the Committee acknowledged the launch of the Udyam Registration Portal (URP) in 2020 and the Udyam Assist Platform (UAP) in 2023 to bring informal micro enterprises into the formal ecosystem. 

It also noted initiatives such as the MSME SAMADHAAN portal for delayed payment redressal, the International Cooperation Scheme, and the Trade Enablement and Marketing (TEAM) Scheme launched in June 2024 to onboard MSEs onto the Open Network for Digital Commerce (ONDC) platform, with a target of supporting five lakh enterprises, including at least 50 per cent women-owned units.

The Committee further highlighted efforts by the National Small Industries Corporation (NSIC) through its e-Country Pavilion on MSME Global Mart to foster international trade linkages. In addition, schemes such as MSME Champions, MSME-Sustainable (ZED), MSME-Competitive (LEAN), and MSME-Innovative (Incubation, Design and IPR) were noted as part of a broader ecosystem support framework.

On equity financing, the Committee observed that inadequate availability of risk capital remains a key challenge. It noted the role of the Self-Reliant India (SRI) Fund in supporting MSMEs to raise equity and pursue listing on stock exchanges, alongside awareness campaigns conducted across Tier 2 and Tier 3 cities.

However, while acknowledging measures such as the Digital Credit Assessment Model (launched March 2025), expansion of credit guarantees, TEAM scheme, TReDS mandates and SME IPO facilitation, the Committee cautioned against a ‘one-size-fits-all’ regulatory approach that may inadvertently constrain micro enterprises.

The Committee urged a stronger outcomes-based monitoring framework to ensure credit expansion results in affordable, effective financing. It recommended wider use of digital credit assessment tools, periodic sector-specific stress reviews, and integration of platforms like Udyam Assist with export and SME capital market schemes to help MSMEs shift from debt reliance to equity-led, innovation-driven growth.

(KNN Bureau)