₹10,000-Crore Bet on Small Businesses

In a strong signal of renewed policy focus on India’s small businesses, the Union government is considering a nearly ninefold increase in funding for the MSME Champions Scheme, with the total outlay likely to touch ₹10,000 crore over the next five years. The move could mark one of the most ambitious interventions aimed at improving MSME competitiveness, sustainability, and global market integration.

Officials aware of the proposal say the enhanced allocation is currently under examination by the Expenditure Finance Committee (EFC) and is expected to be placed before the Cabinet for approval. The clearance process, including inter-ministerial and Cabinet approvals, may take three to five months. If approved, the revised outlay would be a dramatic leap from the ₹1,125 crore allocated to the scheme between FY22 and FY26.

Launched in FY22, the MSME Champions Scheme consolidated six earlier technology upgradation initiatives into a single framework. Its objective is clear: help MSMEs upgrade processes, adopt cleaner manufacturing practices, reduce costs, protect intellectual property, and become globally competitive.

The scheme is built around three strategic pillars. The ZED (Zero Defect Zero Effect) component encourages sustainable and efficient manufacturing by subsidising certification costs and supporting technology upgrades. The MSME Competitive (Lean) component focuses on improving productivity through resource optimisation, waste reduction, and energy efficiency, helping enterprises cut operational costs and enhance output quality. The third component promotes innovation and intellectual property creation, offering financial support for patents, trademarks, geographical indications, and design registrations that are critical tools for MSMEs aiming to expand into global markets.

The proposed expansion comes at a challenging time for MSMEs, as global demand uncertainties, supply chain disruptions, and tariff-related pressures have dampened business confidence. Recent business sentiment surveys by the Small Industries Development Bank of India (SIDBI) indicate a visible cooling of optimism among small enterprises in the past two quarters.

Industry bodies have repeatedly underlined the urgency of scaling up targeted support. According to the India SME Forum, which represents nearly 100,000 MSMEs, “only about 173,000 of India’s 7.4 crore MSMEs are exporters, even though the sector contributes nearly 45% of the country’s total exports.” The Forum has stressed that limited access to technology, finance, and compliance-friendly support mechanisms continues to restrict MSMEs’ export potential.

If implemented, the proposed funding boost could be a genuine game-changer for the MSME ecosystem. By enabling wider adoption of advanced technologies, cleaner production processes, and lean manufacturing practices, the enhanced outlay can help MSMEs move up the value chain, from low-margin production to higher-value, quality-driven manufacturing and services. Greater support for intellectual property creation and certification would also strengthen export readiness, allowing more MSMEs to access global markets, comply with international standards, and integrate into global value chains. Over time, this could help anchor India’s growth story more firmly in a competitive, resilient, and innovation-led small business sector, one that generates employment, drives exports, and sustains long-term industrial growth.