Government readying major MSME reforms: Why it matters for India's economy
- IBEF
- October 24, 2025
The central government is preparing a comprehensive reform package to strengthen India’s micro, small, and medium enterprises (MSMEs), which contribute nearly 30% to the country’s Gross Domestic Product (GDP) and employ about 300 million people. The reform exercise, following a three-tier consultation process, includes cluster-level workshops, zonal conferences across seven cities in November, and a national conference by year-end. Inputs are being gathered to reduce financial and raw material costs, improve logistics efficiency, and boost innovation. The final reform package is expected to be announced by the end of 2025, aiming to align with Prime Minister Mr. Narendra Modi’s vision of a “Viksit Bharat” (Developed India).
Despite its economic importance, the MSME sector continues to face long-standing challenges such as limited access to formal credit, inadequate infrastructure, technology gaps, and shortages of skilled labour. The proposed reforms will focus on easing tax and compliance burdens, enhancing productivity, and integrating artificial intelligence (AI) and innovation into manufacturing. A high-level committee chaired by NITI Aayog member and former Cabinet Secretary Mr. Rajiv Gauba has recommended regulatory simplification. Previous initiatives like Pradhan Mantri Mudra Yojana (PMMY), StandUp India, PM Vishwakarma Scheme, and Prime Minister’s Employment Generation Programme (PMEGP) have supported growth, but the new reform push seeks deeper structural change to formalise and modernise India’s MSME ecosystem.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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