Mumbai, September 1, 2025 – India’s Micro, Small, and Medium Enterprises (MSME) sector has leveraged digital infrastructure to achieve remarkable growth, with collective revenue increasing by 34% to ₹2.8 lakh crore in the first half of 2025, according to the latest MSME Ministry data.
The digital transformation has enabled 4.2 crore MSMEs to access formal credit channels, with total lending to the sector reaching ₹18.5 lakh crore. This represents a 45% increase from the previous year and demonstrates the sector’s growing integration with the formal economy.
Digital Payment Revolution:
The Unified Payments Interface (UPI) has revolutionized MSME operations, with transaction volumes reaching 12.5 billion monthly transactions worth ₹18.2 lakh crore. Small businesses have particularly benefited from reduced transaction costs and improved cash flow management.
Digital lending platforms have disbursed ₹3.4 lakh crore to MSMEs through AI-driven assessment models, reducing approval time from weeks to hours. The Reserve Bank of India’s digital lending guidelines have ensured responsible growth while maintaining financial stability.
Sector-wise Performance Analysis:
Manufacturing MSMEs have shown exceptional growth with a 38% increase in production output. The textile and garment sector leads with 2.2 lakh units reporting increased capacity utilization. Food processing MSMEs have expanded significantly, with 1.8 lakh units now certified under food safety standards.
Service sector MSMEs, particularly in IT and professional services, have grown by 42% in revenue terms. The rise of remote work has enabled small IT companies to serve global clients, contributing ₹85,000 crore to export earnings.
Export Performance and Global Integration:
MSME exports have reached $185 billion in the first eight months of 2025, representing 48% of India’s total merchandise exports. The Government e-Marketplace (GeM) has facilitated ₹2.2 lakh crore in procurement from MSMEs, ensuring steady demand for small businesses.
The One District One Product (ODOP) initiative has created brand recognition for 728 unique products across districts, with 45 products receiving geographical indication (GI) tags. This branding effort has increased average selling prices by 25% for participating MSMEs.
Technology Adoption and Innovation:
Artificial Intelligence and Machine Learning adoption among MSMEs has increased by 280%, with 85,000 units implementing AI-driven solutions for inventory management, customer service, and quality control. This technological upgrade has improved productivity by an average of 22%.
The PM SVANidhi scheme has digitally onboarded 52 lakh street vendors, providing them with access to formal credit and digital payment systems. The scheme has disbursed ₹8,200 crore in loans with a remarkable 96% repayment rate.
Challenges and Support Measures:
Despite growth, MSMEs face challenges in skilled labor availability and raw material price volatility. The government has announced a ₹15,000 crore skill development package specifically for MSME workers, targeting 25 lakh beneficiaries over two years.
The Emergency Credit Line Guarantee Scheme (ECLGS) has been extended with an additional corpus of ₹50,000 crore to support MSMEs affected by global supply chain disruptions. This support ensures continued growth momentum in the sector.