Unlocking Potential: Digital Readiness and Challenges of India's MSMEs

Micro, small, and medium enterprises (MSMEs) in India are wrestling with significant structural challenges, according to a Deloitte India report released on Wednesday. The challenges, including limited access to formal credit and outdated technology, are impacting the productivity of these enterprises, which contribute approximately 30 percent to the country's GDP and form a large portion of its export ecosystem.

The report highlights that despite these hurdles, Indian MSMEs show considerable digital readiness, outperforming many OECD counterparts. They operate at just 18 percent of the productivity level of larger enterprises, compared to the 45-70 percent seen in OECD economies, limiting their global competitiveness.

Deloitte India Economist Rumki Majumdar notes that the credit deficit stands at Rs 30 lakh crore, impacting sectors like textiles and garments. However, states like Maharashtra and Tamil Nadu have become resilient hubs due to structured policy approaches, offering MSMEs a promising growth trajectory in digital and collaborative infrastructure sectors.