Market Update: We break down the business implications, market impact, and expert insights related to Market Update: India economic outlook | Deloitte Insights – Full Analysis.
From policy to practice: Enabling MSMEs for sustainable growth
The findings above point to a broader imperative. While recent policy efforts have rightly focused on boosting domestic demand (through tax reforms, GST rationalization, and accommodative monetary policy), the next frontier is enhancing MSME productivity by focusing on four priorities. This will not only strengthen employment and consumption but also bolster export competitiveness in the face of global uncertainties.
Sectoral priorities: Policymakers will need to prioritize support for export-oriented sectors such as textiles, leather, gems, and jewelry (that are currently at most risk emanating from US tariffs). A critical part of this involves improving MSMEs’ access to finance. Initiatives like the Trade Receivables Discounting System are beginning to tokenize receivables and improve access to working capital. Credit assessment is also being strengthened using filed returns and GST data, but further progress is needed in leveraging MSMEs’ sales records, e-commerce transactions, and digital footprints. Additionally, credit-enhancement mechanisms and partial guarantee schemes will be essential to derisk lending, expand formal credit flows, and sustain MSME growth.
State-level imperatives: States will need to focus on the right mix of infrastructure, digital readiness, and tailored policy support to elevate MSME performance and build long-term resilience. Lagging states will need to intensify investment in industrial clusters, shared facilities, and logistics infrastructure, such as flatted factories, broadband, power, and connectivity infrastructure. At the same time, improving digital ecosystems (online presence, e-commerce, digital payments, digital governance) and skill development will remain essential. Policy measures should also expand access to finance via reforms that ease land and regulatory clearances, interest subsidies, cluster-based financing, and guarantee schemes.
Private sector opportunities in hinterlands: Simultaneously, solution providers and enablers must tap into the next wave of MSME transformation, which is likely to come from non-metro regions of certain states, where MSMEs are concentrated. Deeper digital adoption and a broad-based ecosystem development in tier 2 and tier 3 cities will unlock new opportunities to offer innovative and scalable services.
Role of artificial intelligence: AI can significantly accelerate MSME growth in India by enhancing productivity, improving market access through digital platforms, and enabling data-driven decision-making.