June 27 is observed as International MSME Day which is an occasion that transcends symbolism to reaffirm a foundational truth: No economy can achieve durable, inclusive growth without nurturing its small and medium enterprises. The day draws global attention to the imperative of strengthening MSMEs' access to finance, markets, technology and policy support, and serves as a reminder that the path to sustainable development must be built through the millions of entrepreneurs who create value at the grassroots level. GDP (Illustration: Abhimanyu Sinha)India’s journey towards Viksit Bharat @2047 cannot be achieved by headline growth alone; it must be measured by how deeply prosperity travels into India’s villages, small towns and emerging enterprise clusters. In this transformative journey, Micro, small and medium enterprises (MSMEs) occupy a central place as the bridge between national economic ambition and grassroots opportunity.Globally, MSMEs form the backbone of economic ecosystems, accounting for nearly 90% of all business enterprises and more than 50% of employment worldwide. In India, their role is even more pronounced and structurally vital, as the sector contributes 31.1% to the nation’s Gross Domestic Product (GDP), 35.4% to manufacturing Gross Value Added (GVA), and nearly 48.6% to total exports. As the country's second-largest employer after agriculture, the sector sustains over 32.82 crore livelihoods across 7.47 crore formal enterprises. This formal layer continues to expand rapidly; driven by digital integration through the Udyam and Udyam Assist platforms, systematically shrinking the informal shadow economy and integrating millions of micro-entrepreneurs into the structured financial ecosystem. The scale places India as the third-largest MSME ecosystem in the world after the US and China, yet the comparison with advanced manufacturing-led economies such as Germany, Japan and South Korea, where MSMEs contribute around 55%, 52% and 47% respectively to economic output clearly underlines India’s (@31.1%) untapped potential. The message is significant, India already has a vast MSME base, but its next leap towards Viksit Bharat @2047 will depend on transforming this base into a more productive, technology-driven, export-oriented and globally competitive.As per PIB data released in February 2026, the MSME sector in India is uniquely positioned to execute this transition through four interconnected strategic levers such as job rich industrialisation, deepening participation in Global Value Chains (GVCs), diversifying the export profile and transitioning from scale to sophistication. The rapid scaling of this sector is heavily supported by influx of capital and deliberate policy frameworks designed to optimise business execution. This momentum is further bolstered by the Self-Reliant India (SRI) Fund, an equity-infusion mechanism that has already deployed ₹15,442 crore across 682 high-growth enterprises, allowing midsized firms to scale up without collapsing under heavy debt burdens.The Union Budget FY 2026-27 reinforces this growth framework by positioning MSMEs as a key pillar of India’s competitiveness, manufacturing resilience and export-led expansion. The Budget adopts a focused three-pronged approach i.e., equity support, liquidity enhancement and professional enablement to help MSMEs scale into future-ready champion enterprises. Key initiatives include ₹10,000 crore SME Growth Fund, an additional ₹2,000 crore infusion into the SRI Fund and strengthened credit guarantee support through CGTMSE to improve access to collateral-free finance for micro and small enterprises. Further, the mandated use of TReDS for CPSE procurement from MSMEs, integration of GeM with TReDS and proposed securitisation of trade receivables are expected to accelerate invoice realisation, improve working capital efficiency and broaden institutional participation. Collectively, these measures provide a strong policy impetus for formalisation, technology adoption, export readiness and long-term competitiveness of the MSME ecosystem. There has been constant support for the MSME Sector not only in the good times, but also during the crisis when special measures are announced to cater their needs. The banking sector has played the vital role to meet the credit needs of MSMEs as credit velocity to MSMEs has emerged as a primary driver of overall credit growth. The banking system in India facilitates formal credit to them through collateral-free loan schemes, and digital platforms like the Jan Samarth Portal. Lenders are increasingly moving toward cash-flow-based lending, using GST data and Account Aggregators instead of physical collateral. Yet the financing gap persists and narrowing it is the defining challenge for India's banking sector in the Viksit Bharat decade.Going forward, the true strength of India’s MSME sector will lie in its ability to evolve into a future-ready engine of inclusive and sustainable growth. MSMEs embody the spirit of enterprise, resilience and self-reliance that defines India’s development journey, while empowering marginalised communities, enabling first-generation entrepreneurship among youth and women, preserving traditional skills and driving innovation from the ground up. As India moves decisively towards Viksit Bharat @2047, the sector must be supported to transition from informal to formal, from small-scale production to value-added manufacturing, from local markets to global value chains, and from survival-led enterprise to technology-led competitiveness. A vibrant, digitally enabled, financially empowered and globally connected MSME ecosystem will therefore be a decisive strategic imperative for building a developed, prosperous and inclusive India.(The views expressed are personal)This article is authored by Ashok Chandra, MD&CEO, Punjab National Bank.