MSMEs stifled by funding challenges while start-ups soar: Is the lack of innovation the true barrier?

MSMEs have been stymied by limited access to funds, even as start-ups are raking in massive investments. Investors argue that MSMEs lack the disruptive spark. But is this truly the root of the problem?

Print Edition: 21 Jul, 2024

MSMEs have been stymied by limited access to funds, even as start-ups are raking in massive investments. Investors argue that MSMEs lack the disruptive spark. But is this truly the root of the problem?

This sector contributes a chunk to India’s GDP and exports and employs the highest number of people outside farms. Yet, when it comes to companies in the sector raising money, it is an uphill struggle, with insufficient working capital stunting their growth. The sector is none other than the country’s micro, small, and medium enterprises (MSMEs)—the hidden heroes of the economy—where the current solutions, both from the government and the private sector, seem ineffective in addressing their funding needs.