Fuelling growth with credit reform

India is at an inflection point, as the country's economic growth depends on unblocking credit access for millions of small enterprises

- SHWETA RAJPAL KOHLI

INDIA'S ECONOMIC AMBITIONS hinge on the strength and resilience of its small businesses. Micro, small, and medium enterprises (MSMEs) are the backbone of India's economy, accounting for nearly 30% of the country's GDP, and employing over 110 million people. Yet, despite their scale and significance, MSMEs remain one of the most underfinanced sectors in the economy. Access to capital remains their single biggest bottleneck.

As India aspires to double its GDP and build inclusive growth, ensuring accessible, affordable credit for MSMEs is no longer just a sectoral issue-it is a national economic imperative. Today most MSMEs, especially the smallest ones, still find it difficult to borrow because they do not have enough collateral, long credit histories, or direct relationships with banks.

At a time when the government is aiming to transform India into a global manufacturing and services hub, fixing MSME credit must be a national priority. The solution lies in enabling more risk-taking, smarter partnerships to leverage innovations, and greater flow of capital into this sector.

Bringing down cost of capital