Nath says MSMEs face no difficulty in accessing credit
India’s MSMEs continue to demonstrate remarkable resilience, expanding their credit footprint and sustaining growth momentum in a shifting global trade landscape, says a report based on industry wide survey released on 22 Jan.
The 4th edition of the MSME Sampark Report highlights how global trade challenges, including rising US tariffs and slowing exports, are affecting MSME revenues in sectors such as textiles, automotive, chemicals, food processing, and electrical equipment.
UGRO Capital Ltd, a leading Mumbai-listed DataTech NBFC focused on MSME lending, has released prepared in collaboration with Dun & Bradstreet. The report features findings drawn from an analysis of over 73,000 MSMEs across eight key sectors, alongside an exclusive nationwide survey of more than 5,000 MSMEs.
Shachindra Nath, Founder & Managing Director – UGRO Capital, said, “Despite global trade challenges and sectoral headwinds, India’s MSME ecosystem remains resilient and forward-looking. The UGRO Exclusive Survey on Small Businesses offers deep insights into how credit access, formalisation, and digitalisation are shaping this transformation.”
“Encouragingly, 83% of MSMEs surveyed reported no difficulty in accessing credit, with NBFCs emerging as their preferred financing partners, further validating our collective efforts to formalize and simplify small business lending. As we look ahead, it is essential for all stakeholders, banks, NBFCs, policymakers, and entrepreneurs to work together in creating a transparent, responsible, and technology-driven credit ecosystem that enables every small business to grow with confidence and purpose.”
Dr Arun Singh, Global Chief Economist at Dun & Bradstreet, said, “Dun & Bradstreet’s Global Business Optimism Index (GBOI) reflects a moderation in overall business optimism for India’s small and medium businesses, as they continue to adjust to a challenging trade environment.
“Despite this, anticipation for future domestic orders rose amongst Indian MSMEs, signalling strengthened optimism in the domestic economic environment, supported by robust industrial output, and a supportive price environment.
“Credit disbursement to micro and small enterprises increased in July 2025, underscoring the effectiveness of the government’s credit guarantee scheme. Sustained momentum will depend on the extent to which India can insulate its MSME sector from global trade disruptions, including via targeted government interventions, such as strategic upgrades to the Production-Linked Incentive (PLI) scheme while continuing to foster domestic growth.”
Key Findings of the 4th MSME Sampark Report:
• MSMEs’ contribution to India’s GDP has rebounded from post-Covid lows of 27.3% in FY-21 to approximately 30% in FY-25.
• Global supplier risks are rising as firms shift toward localised supply chains, while economic and policy uncertainty dampens sales and export sentiment.
• FY24 revealed a mixed EBITDA performance among micro enterprises, highlighting how varying cost dynamics and operational strengths played out across sectors.
• Credit growth to micro and small enterprises grew 12% YoY, outpacing medium enterprises (14% YoY) and overall credit growth.
• Increased imports of low-cost Chinese goods and weak global demand have affected the revenue margins of micro-enterprises in auto components, electrical equipment and chemical sectors.
• Udyam registrations rose 18% from 58.46 million in January 2025 to 68.85 million in September 2025, signalling stronger formalisation, rising business confidence, and deeper MSME integration into the formal economy.
• MSMEs face rising stress from US tariffs, especially in textiles, gems, auto components, and agri-marine subsectors.
Findings from analysis of MSMEs during FY20-FY24 across 8 sectors
Revenue Trends in Micro Enterprises: Micro enterprises in the manufacturing sector experienced a broad revenue decline in FY24 compared to FY23, driven largely by weaker performance in automotive, chemical, education, electrical equipment, and light engineering segments. The slowdown reflects ongoing trade uncertainties, supply chain disruptions, and the increasing influx of low-cost Chinese imports that have intensified competitive pressures.
Rising Credit Allocation to MSMEs: Credit flow to MSMEs strengthened notably, with the share of secured loans rising from 80% in Q1FY24 to 89% in Q1FY25. At the same time, unsecured lending also gained traction particularly in healthcare (up 43%), electrical equipment (30%), and chemicals (26%) between January–March 2024 and the same period in 2025. This trend indicates improved access to finance, supported by higher risk appetite among banks and the continued impact of government-backed credit guarantee schemes.
Policy support to MSMEs at a global level: In response to the adverse effects of US tariffs, several countries including Thailand, Taiwan, China, and Brazil have rolled out targeted support measures for MSMEs. These range from credit lines and export guarantees to subsidies and digital upskilling programmes, designed to enhance competitiveness and market adaptability. India has also taken proactive steps, such as revising GST slabs, cutting policy rates by a cumulative 100 basis points in 2025 with scope for further easing, and accelerating efforts to diversify export markets.
UGRO Capital Ltd (NSE: UGROCAP) (BSE: 511742) is a DataTech Lending platform, listed on NSE and BSE, pursuing its mission of “Solving the Unsolved” for the small business credit gap in India, on the back of its formidable distribution reach and its Data-tech approach. Fiinews.com
