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In a recent initiative, NITI Aayog has proposed a dedicated financing scheme under the Ministry of Micro, Small, and Medium Enterprises (MSME) to support medium-sized firms. The proposal includes concessional loans capped at INR 25 crore, with a maximum of INR 5 crore per request, and the introduction of a medium enterprise credit card with a pre-approved limit of up to INR 5 crore. Additionally, the report recommends allocating 25-30% of the Self-Reliant India (SRI) Fund exclusively for medium enterprises to bolster research and development (R&D) efforts. This move follows the recent expansion of the 'medium' enterprise definition in the Union Budget 2025, aiming to provide better financial support and promote growth among these firms.
NITI Aayog unveiled a strategic proposal aimed at bolstering India's medium-sized enterprises, which often face higher capital costs compared to their micro and large counterparts. The think tank highlighted that medium enterprises receive significantly fewer priority sector loans and endure interest rates approximately 4% higher than larger firms, making capital more expensive for them. Advertisement
To address these challenges, NITI Aayog has recommended the introduction of a dedicated financing scheme under the Ministry of Micro, Small, and Medium Enterprises (MSME). This scheme would allow medium firms to avail loans at concessional rates, capped at INR 25 crore, with a maximum of INR 5 crore per request. Furthermore, the proposal includes launching a medium enterprise credit card with a pre-approved limit of up to INR 5 crore, offering interest rates aligned with market standards to address emergency funding requirements.
The report also emphasizes the importance of research and development (R&D) for medium enterprises, noting that they account for 81% of all MSME investment in R&D. To support this, NITI Aayog suggests reserving 25-30% of the Self-Reliant India (SRI) Fund exclusively for financing projects by medium firms. The SRI Fund, launched in 2021, has an allocation of INR 10,000 crore from the Centre and INR 40,000 crore from private equity, with INR 4,885 crore already invested in MSMEs.
These recommendations come in the wake of the Union Budget 2025, which broadened the definition of 'medium' enterprises. Previously, medium enterprises were defined as those with a turnover between INR 50-250 crore and investment of INR 10-50 crore in plant and machinery. The revised thresholds now include firms with a turnover of INR 100-500 crore and investment of INR 25-125 crore, expanding the category to cover more firms.
Despite constituting only 0.3% of the over 6 crore registered MSMEs in India, medium enterprises have a significant impact on employment and innovation. On average, each medium firm employs 89 people, compared to 19 for small and 6 for micro enterprises. By implementing these proposals, NITI Aayog aims to strengthen the financial ecosystem for medium enterprises and ensure their sustainable development.
By addressing the financial disparities these firms face, the think tank aims to create a more equitable and supportive environment for their growth. The suggested measures, including concessional loans, credit facilities, and dedicated R&D funding, are poised to empower medium enterprises, enabling them to scale operations, enhance competitiveness, and contribute more significantly to the nation's economic development.
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