Simplifying Compliance Can Unleash the Power of MSMEs

Micro, Small, and Medium Enterprises (MSMEs) form the backbone of India’s economic engine, powering employment, innovation, and inclusive growth. Over the past decade, the government has launched a wide range of initiatives, from financial support schemes to digital facilitation programs, to strengthen the sector. Yet, despite these efforts, many MSMEs still struggle with technology adoption, limited access to finance, and complex compliance requirements.

In an insightful conversation, our expert underscores the need for a balanced approach that blends decentralization with integration, where district-level outreach complements centralized monitoring to ensure true last-mile impact. The discussion further stresses the urgency of grassroots digital skilling to prepare MSMEs for an AI-driven economy, advocating a carrot-and-stick model that rewards continuous learning and accountability.

Looking ahead, the vision for the coming decade is both ambitious and attainable: to build an ecosystem that empowers India’s youth as entrepreneurs and job creators, ensuring MSMEs remain the cornerstone of the nation’s growth story.

At the 4th International SME Convention, organized by the India SME Forum in collaboration with the Department for Promotion of Industry and Internal Trade (DPIIT), Government of India, India’s leading Public Policy exponent Vineeta Hariharan, shared her perspective in an exclusive interaction with The Interview World. She recommended policy measures to make the business environment more supportive and compliance simpler for MSMEs; urged enterprises to embrace technology-driven operational transformation; and highlighted government initiatives that promote skilling and digital adoption for enhanced productivity and employability. She also envisioned the future of the MSME sector, outlining its growth and evolution over the next five to ten years.

Here are the key takeaways from her compelling conversation.

Q: Given the challenges MSMEs face in technology adoption, access to finance, and regulatory compliance, what policy measures would you recommend to make the business environment more supportive and compliance requirements simpler for MSMEs?

A: Over the past decade, the Government of India has made sustained efforts to strengthen the Micro, Small, and Medium Enterprises (MSME) sector through targeted programs, policy reforms, and ecosystem facilitation. Despite this momentum, a critical challenge persists, reaching MSMEs at the last mile. Greater focus and strategic intervention are needed to ensure that the smallest and most remote enterprises benefit from these initiatives.

To achieve this, the government must balance decentralization with integration. On one hand, a district-wise, localized approach is essential to penetrate deeper and address region-specific needs. On the other, integrated coordination across central, state, and district platforms is crucial to unify efforts and track progress effectively.

Integration, in this context, means bringing every initiative onto a common platform, where central and state portals communicate seamlessly, and district-level outcomes are reflected in unified dashboards. Such central monitoring, combined with grassroots decentralization, can create a dynamic feedback loop. Only when district-level sales and data are captured comprehensively can policymakers truly reach MSMEs at the block and grassroots levels, ensuring that support translates into real, measurable impact.

Q: Technology adoption and investment are crucial for MSMEs’ growth. What advice would you give to MSME companies to drive operational transformation through technology?

A: Technology adoption remains a challenge for many traditional MSMEs. However, new-age enterprises are rapidly embracing digital transformation, supported by one of the highest rates of digital penetration in the world. With the era of artificial intelligence unfolding, it has become even more critical for MSMEs to leverage government-backed digital platforms to enhance efficiency, competitiveness, and market reach.

To realize this potential, grassroots-level digital training must become a national priority. Empowering entrepreneurs with practical skills and digital literacy will ensure they are not only future-ready but also equipped to thrive in an AI-driven economy. This shift from awareness to capability is essential for sustaining growth and building resilience across India’s MSME ecosystem.

Q: Continuous skill development remains a major challenge for MSMEs. What initiatives should the government undertake to encourage MSMEs to prioritize skilling and technology adoption for greater operational excellence and employability?

A: We need to adopt a carrot-and-stick approach to ensure consistent skill development across the MSME sector. Incentives and subsidies should be directly linked to skill attainment. Enterprises that invest in upskilling should receive additional benefits, while those that do not meet basic competency benchmarks should face limited access to certain support schemes. Such a framework would make skilling mandatory and measurable, especially for last-mile MSMEs, driving accountability and long-term capacity building.

Q: How do you envision the growth and evolution of the MSME sector over the next five to ten years?

A: MSMEs will undoubtedly continue to grow, serving as the cornerstone of India’s economic transformation. As the nation advances, it becomes clear that the government alone cannot provide employment for every citizen. Sustainable progress lies in fostering entrepreneurship and empowering individuals to create opportunities for others.

MSMEs, with their agility and innovation, are uniquely positioned to drive this change. Therefore, India’s youth must be trained and inspired to think like entrepreneurs, equipped with the skills, mindset, and resilience to build and scale businesses. Cultivating this spirit of enterprise will ensure that the next generation becomes both job creators and catalysts of inclusive growth.