MSMEs need protection, not just promotion: Report
Kochi, June 24
Arguing that India's small businesses need protection from increasingly volatile global economic shocks, the Institute of Small Enterprises and Development has proposed a new policy framework that seeks to move MSME support beyond subsidies and promotional schemes towards a comprehensive de-risking strategy.
The proposal forms the centrepiece of the India MSME Report 2026, released here on Wednesday by Mercy Epao, Joint Secretary in the Ministry of MSME.
At the heart of the report is the concept of enterprise security, which argues that the survival of micro, small and medium enterprises should be treated as a fundamental economic priority, much like the principles underpinning National Food Security.
The report notes that while all businesses face risks arising from economic downturns, geopolitical conflicts and public health emergencies, MSMEs remain disproportionately vulnerable.
Events such as the Covid-19 pandemic and ongoing tensions in West Asia have demonstrated how small businesses often experience what economists describe as asymmetric lagging vulnerability, where the full impact of a crisis emerges only after a delay as costs rise, demand weakens, and employment comes under pressure.
According to ISED, traditional relief measures introduced during crises, including emergency credit support schemes, address only immediate challenges.
The deeper structural weaknesses affecting MSMEs, ranging from limited access to finance and technology to shrinking profit margins and market uncertainties, require a more durable policy response.
To address these concerns, the institute has unveiled its Enterprise Security and Resilience Framework, which calls for coordinated action by governments, banks, insurance companies and promotional agencies to help entrepreneurs manage cascading risks that threaten business viability.
"Entrepreneurship itself is a public good and deserves protection," said ISED Director Dr P.M. Mathew, arguing that governments must ensure access to critical public goods such as affordable credit, technology and market opportunities.
The report's central message is that the time has come for a decisive policy shift from merely promoting MSMEs to systematically de-risking them, thereby strengthening the resilience of a sector that contributes significantly to employment, innovation and economic growth.
Max Balakoviskiy of the Organisation for Economic Co-operation and Development (OECD) described the framework as an innovative contribution to global MSME policy discussions, while former IRDAI member Thomas Devasia stressed the need for closer convergence between banking and insurance services to support small enterprises.
— IANS
Reader Comments
Interesting approach from ISED. As someone who worked with MSMEs in Bangalore, I've seen how quickly a small pandemic shock can wipe out years of effort. But I wonder – will this de-risking framework actually reach the mom-and-pop shops in Tier 3 towns? The implementation gap in India is massive. Let's hope the report's recommendations don't just gather dust like so many before.
💯 This is what we've been saying! My kirana store in Hyderabad survived COVID only because of community support, not government schemes. The emergency credit was too little too late. We need structural changes – affordable tech access, market linkages, and yes, insurance that actually covers business interruption. Kudos to Dr Mathew for framing entrepreneurship as a public good!
While I agree with the sentiment, let's be realistic – the MSME ministry itself is underfunded. How will they implement this grand vision? The report mentions "coordinated action" from multiple agencies, but in India, coordination is a joke. My suggestion: start with the insurance part, get IRDAI to mandate micro-insurance products for small businesses, then tackle the rest. Baby steps, not grand frameworks.
As a small business owner in Mumbai, this resonates deeply. The "asymmetric lagging vulnerability" concept is real – we felt the COVID impact for two full years after things supposedly reopened. But I worry about the cost. If this framework means more compliance and paperwork, we'll drown. MSMEs need simplicity, not another red-tape monster. Hope the drafters keep that in mind.
K We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.