NEW DELHI: In an effort to transform medium enterprises into global businesses, the NITI Aayog on Monday recommended working capital support of up to ₹25 crore at concessional interest rates, credit card with pre-approved limit of up to ₹5 crore, and a slew of technology as well as skilling measures.
The government has been working on a roadmap for tailor-made policies for medium companies. This comes as the Centre feels that the needs of these enterprises often get ignored as they are clubbed into the same category as micro, small, and medium enterprises (MSMEs).
“A dedicated financing scheme under the Ministry of MSME is proposed allowing medium enterprises to apply for loan at concessional rates at their local retail banks and receive fast track decisions/loan up to a certain percentage of revenue depending upon the sector of the unit i.e. manufacturing or services capped at ₹25 crore with a maximum of ₹5 crore per request can be availed,” said NITI Aayog in its report ‘Designing a Policy for Medium Enterprises.’
Medium enterprises typically have significantly higher capital requirements than MSMEs. There is currently no dedicated scheme for addressing the working capital needs of medium enterprises, the Centre’s official policy think tank said.
According to the revised classification norms announced in the FY26 Budget, medium enterprises can invest up to ₹125 crore and have a turnover limit of ₹500 crore.
At an event last month, MSME secretary SCL Das said that these were revised precisely to allay the inhibitions of MSMEs to scale into larger enterprises.
According to NITI Aayog, the need for special focus on medium enterprises stems from the need to boost employment. It feels that the medium sector can be among the largest employment generators in the country, if provided with the right support.
A NITI Aayog official, present at the report launch, said current trends show that a medium business typically ends up opening a new venture when it reaches the ceiling of eligibility criteria because it does not want to lose benefits.
“That is a major harm to economies of scale. The government wants them to make their primary ventures larger,” he said.
According to NITI Aayog Vice-Chairman Suman Bery, the experience of the US, Germany, and Italy indicates that with the right support, these are very important parts of firm dynamics.
“In fashion, Italy transformed from a crafts tradition to generating big fashion houses like Giorgio Armani and Prada. India has that capability because of our deep crafts traditions and entrepreneurship. Not just in manufacturing, we should be thinking even medium enterprises can aspire for similar growth over the next 10-15 years,” said Bery.
Medium enterprises also contribute more to research and development (R&D) compared to micro and small enterprises.
“What we know from Mittelstand in Germany is that they focused on niche areas like machine tools – a similar journey is anticipated by India’s medium enterprises,” said the NITI Aayog vice-chairman.
He also said that a focus on medium companies is needed since there’s a need for transition from informal to formal economy, adding that these companies are characterised by formal labour, while micro and small enterprises employ primarily informal labour.
NITI Aayog’s formal recommendations also proposed to leverage the existing technology centres the Ministry of MSME and revamp them into India MSME 4.0 competence centres – these will cater to various industries, including General Engineering, Fragrance and Flavour, Electronics Systems Design and Manufacturing (ESDM), Sports, and other sectors based on regional and industry-specific demands.
Industry representatives said the all India census of MSMEs needs to be undertaken as it has been nearly 20 years since the last survey.
Source: Business Standard
