India's MSMEs resilient despite global tensions: Report
New Delhi, June 2
India's micro, small and medium enterprises "remains resilient despite global geopolitical uncertainties" and the sector's credit exposure rose to about Rs 46 lakh crore in April 2026, a report said on Tuesday.
The report from credit bureau CRIF High Mark said MSMEs' resilience is supported by strong domestic demand, policy support, and diversified credit participation.
The overall credit exposure in the sector rose 12.8 per cent year‑on‑year, supported by asset‑quality gains, diversified geographic and sectoral participation.
However, early impact of global geopolitical uncertainties into domestic credit supply in certain sectors and borrower segment is evident through a slowdown in credit growth, with portfolio expansion and active loan growth moderating significantly compared to last year
Between December 2025 and April 2026, POS growth slowed to 3.1 per cent compared to 9.7 per cent in the prior year, while active loans declined by 3.5 per cent.
The report highlighted that manufacturing and trade - which together account for more than 60 per cent of point‑of‑sale share - showed the first signs of stress, with manufacturing growth moderating to 4.3 per cent from 10.4 per cent last year.
Sectors such as shipping & transport, food processing, and auto & ancillaries recorded moderate POS declines amid global uncertainties.
Early-stage delinquencies in manufacturing also rose slightly from 1.6 per cent to 1.8 per cent between March-April 2026. However, these movements may also reflect cyclical factors and merit ongoing observation to gauge their persistence.
Lenders have adopted a more cautious approach, with credit growth slowing across PSU banks, private banks, and NBFCs, reflecting heightened risk sensitivity amid global uncertainty.
Early warning indicators are beginning to surface, including rising delinquency levels in the micro segment, manufacturing sector, PSU bank portfolios, and cash credit facilities.
Working capital utilisation remains elevated, suggesting businesses are relying more heavily on existing credit lines to manage operational and supply-chain pressures.
The impact remains selective rather than systemic, with portfolio quality largely stable and stress concentrated in specific sectors and borrower segments rather than across the broader MSME ecosystem, the report noted.
— IANS
Reader Comments
As someone running a small manufacturing unit, I can feel the stress. Orders from Europe have slowed down, and working capital is tight. The report is right about rising delinquency—it's not easy. But India's domestic demand is keeping us afloat. Let's hope the cautious lending doesn't hurt small players like us.
A 12.8% credit growth is still impressive! But that 3.5% decline in active loans is a red flag. Banks are tightening the purse strings because of global uncertainty—classic "khatre ka maal" approach. The government should step in with more guarantees for MSME loans. Small businesses need oxygen now.
Interesting report. The early warning indicators—rising delinquencies in micro segment and manufacturing—are worth watching. It's not systemic yet, but selective stress can spread if not addressed. India's domestic demand is strong, but global headwinds are real. Policy support needs to be proactive.
"Resilient" is the right word. Despite all the global tension, our MSMEs are still growing credit exposure. But we need to talk about the high working capital utilisation—businesses are stretching their credit lines too thin. That's a recipe for trouble. Let's hope the RBI keeps an eye on this.
The manufacturing slowdown is concerning. 4.3% vs 10.4% last year—that's a big drop. And the trade sector also showing stress? For a country that's trying to be a manufacturing hub, this is a wake-up call. Domestic policies are good, but global supply chains are unpredictable.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.