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India’s MSMEs are stuck in a crisis-rescue cycle. They need steady liquidity flows

MSMEs are not a marginal segment of the economy. They contribute nearly 30% of the GDP and account for about 45% of India’s exports. The fragility is significant.

A small exporter in Tiruppur does not follow the Strait of Hormuz. However, when shipments are rerouted, resulting in increased freight costs and delayed payments, he feels the impact immediately—not through media headlines, but through cash flow disruptions. While his order book may withstand global shocks, liquidity often does not. This encapsulates the paradox inherent in India’s MSME economy: resilience is presumed, yet fragility is systemic.

This fragility is significant because micro, small, and medium enterprises (MSMEs) are not a marginal segment of the economy. They contribute nearly 30 per cent of the GDP and account for approximately 45 per cent of India’s exports, anchoring the nation’s position in global value chains. In industries such as textiles, leather, and food processing, MSMEs form the foundation of trade. As a result, when global disruptions intensify, as observed during the ongoing West Asia crisis, the stress on MSMEs rapidly escalates into a macroeconomic concern.

That concern is already visible on the ground.

Recent reports indicate that MSME exporters are encountering not only increased costs but also heightened compliance burdens, shipment delays, and working capital stress due to constantly shifting routes and regulatory uncertainties. The government has responded with targeted support, including the Rs 497 crore RELIEF scheme, aimed at providing insurance coverage and stabilising export flows, particularly for the MSMEs. These measures are timely and necessary, yet they also reveal a........

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