India’s MSMEs facing labour and access to credit challenges

Around a quarter of India’s micro, small and medium-sized enterprises (MSMEs) say a lack of skilled labour is one of their major challenges, according to a new survey by the Small Industries Development Bank Of India (SIDBE)

It found that these shortages are particularly acute in sectors including defence equipment, ready-made garments, hotels and sanitaryware.

The SIDBI report, called ‘Understanding the Indian MSME Sector: Progress, and Challenges’, provides comprehensive insights into the rapidly growing MSME sector in India, based on both primary and secondary research. It includes industry, gender and regional-level analysis, drawn from a survey of more than 2,000 MSMEs across 19 industries.

In particular, the report provides insights into women entrepreneurship and sustainability initiatives, aligning with the Government’s focus on these areas. The study also offers an estimate of the credit gap in the MSME sector.

When it comes to access to credit, survey respondents consider timely and adequate credit access as one of their key challenges despite the comprehensive policy initiatives in that regard. While borrowings from informal sources are minimal for small and medium enterprises at 3% and 2% respectively, it is still relatively significant at 12% for micro enterprises.

The survey also found that 18% of MSMEs using digital lending platforms and 90% accepting digital payments, demonstrating “promising digital adoption”.

Increased credit supply to MSMEs is in evidence, the research found. However, the study broadly estimates that the sector still has an addressable credit gap of about 24%. The gap is higher in the services sector at 27%; it is estimated to be also higher at 35% for women-owned MSMEs, indicating a need for targeted government policy.

SIDBE found that women entrepreneurship has become a significant aspect in the MSME sector, with 26.2% in proprietary enterprises being owned by women as recorded in the Annual Survey of Unincorporated Sector Enterprises (ASUSE) of 2023-2024, signalling growing inclusivity.

Some 76% of the women-led MSME respondents have access to credit, but they continue to face higher challenges compared with their male counterparts, with 41% highlighting credit access and high competition as the largest obstacle to their growth.

According to the survey, a majority of the MSMEs have been slow to adopt modern channels to reach customers. Around 70% of respondents continue to use traditional modes of marketing, which hinders their scalability and ability to remain competitive. The report said: “Effective utilization of e-commerce and digital marketing can provide MSMEs with improved access to new markets and customers.”

However, the survey also found that inadequate infrastructure and technology adoption affects productivity and competitiveness; this is more prominent in sectors like auto components, iron and steel and transport and logistics. A significant proportion of the respondents cited technology adoption as a major obstacle to their growth.

When it comes to sustainability, more than one-third of MSMEs have adopted sustainable practices; 31% use energy-efficient systems, and 21% utilize renewable energy. However, 33% cite limited awareness as a key barrier to further adoption.

Tech challenges leave Indian accountants ‘overwhelmed’

The rapid pace of technology changes and impact of artificial intelligence on their roles has left Indian accountants overwhelmed, according to a survey by global accounting body ACCA.

The third annual Global Talent Trends Survey 2025 by the Association of Chartered Certified Accountants (ACCA) revealed that more than half of Indian accountants taking part in a global survey have flagged concerns of not being able to develop the required future skills due to the frequently changing technology.

“This concern is inversely proportional to seniority, where mid and junior-level professionals are more worried than senior leadership and board-level respondents,” the survey found.

Some 54% of India respondents are concerned about not developing the required future skills, higher than the global average of 50%. And only 37% of respondents said that their organisation was providing opportunities to learn AI-related skills.

“To thrive in the future workplace, a thorough understanding of technology is non-negotiable. I feel very excited to see that finance professionals are getting more comfortable with technology,” Emma Jindal, CFO of Accenture, India, said in the survey. Regarding hybrid and remote working models, the survey revealed that 45% of respondents from India were working in a hybrid model, while 41% of them were fully office-based. Out of those working from the office, only 13% prefer the model, while 75% prefer hybrid working.

Over 10,000 individuals from 175 countries, including India, took part in the survey which focused on issues ranging from career ambitions, hybrid working and inclusivity practices to upskilling, mental health and employability issues.