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UPSC » Daily News Analysis ‘Challenges Faced by Women-Led MSMEs in India’ : 8 July

Daily News Analysis ‘Challenges Faced by Women-Led MSMEs in India’ : 8 July

Table of Content

Key Points:

  • Micro, Small and Medium Enterprises (MSMEs) are crucial to India’s economy, contributing nearly 30% to GDP in 2024 and providing large-scale employment. 
  • The government aims to raise this to 35% in 2025, with a strong focus on women-led enterprises.

Status of Women-led MSMEs:

  • Women-owned businesses form 20% of all MSMEs in India.
  • Their share in total turnover is only ~10%, and investment share is 11–15%.
  • Credit gap for women entrepreneurs is ~35%, compared to 20% for men.
  • 64% of PMMY accounts belong to women, but they receive only 41% of sanctioned loan amount.
  • Over 1.86 crore informal women-run micro enterprises (IMEs) registered via Udyam Assist Portal, yet access to credit remains limited.

Key Challenges:

  • Limited access to formal credit and high credit gap.
  • Lack of awareness of financial schemes and low financial literacy, especially in rural areas.
  • Poor support from banks and local authorities.
  • Collateral requirements and property ownership issues act as deterrents.
  • Discrimination in loan processing: women need more bank visits than men to get loans sanctioned.

Government Initiatives:

  • Pradhan Mantri MUDRA Yojana (PMMY): Offers collateral-free loans to small non-farm businesses.
  • Udyam Assist Portal: Helps informal businesses formalize for eligibility under priority sector lending.
  • RBI liquidity support: Reduced repo rate (to 5.5%) and CRR cut to enhance credit availability.

Way Forward:

  • Targeted financial literacy programs for women entrepreneurs.
  • Simplify loan processes and ensure collateral-free access to small loans.
  • Strengthen the implementation of schemes through better coordination with banks and local authorities.
  • Encourage digital tools and outreach for real-time support and awareness.
Why in News?
  • Recent data shows that women-led MSMEs, despite forming 20% of total MSMEs, contribute only about 10% to total turnover, highlighting gaps in financial access.