Top 10 Challenges Faced by MSMEs in India Today

While running an MSME in India, you already know the passion and commitment it calls for. MSMEs fuel almost 30% of India’s GDP and provide work to more than 110 million people in the country. Yet, like any business, when you face challenges, with the right approach, these can turn into growth opportunities. Here, we are going to talk openly about the top 10 challenges faced by MSMEs like yours, and practical ideas to help you tackle them head-on. Let’s go.

What are the Challenges Faced by MSMEs in India?

1. Limited Access to Finance

For most MSMEs, getting a loan at the right time is a major struggle. Banks still demand collateral, and the documentation process is long and confusing. As per the recent analysis, out of 63 million MSMEs in India, only 40% have access to formal credit. The remaining 60% are still underserved or depend on informal sources. This lack of timely finance remains one of the top MSME challenges in India.

2. Delayed Payments and Working Capital Shortage

This is among the most frustrating problems faced by the MSME sector in India today. You may have experienced buyers delaying payments beyond the agreed time. This leads to a fund shortage. It becomes tough to pay your suppliers, workers, or take up new orders. As of Aug 2025, a total of 2,48,692 applications have been filed by MSEs for delayed payments on the MSME Samadhaan portal.

3. Regulatory Compliance Burden

The compliance maze can leave you frustrated. Whether it’s GST filings, labour laws, or local permits, the rules keep changing. Each update means more hours spent on paperwork and less time on running your business. The pain of compliance is a constant MSME issue in India.

4. Technology Adoption Gaps

Today, digital is the way forward. But you may find it challenging to adopt new tech due to costs, lack of technical support, or simply not knowing where to start. Many MSMEs avoid going online or using cloud accounting, which means they miss out on saving time and reaching more customers.

5. Lack of Skilled Workforce

Finding and keeping skilled workers, especially outside major cities, is another big roadblock. When your team is not trained for modern tools or practices, your productivity takes a hit, and it’s tougher to compete with larger companies.

6. Market Access Challenges

Reaching new customers is always tough. Low online presence, weak branding, or not knowing the latest marketing tactics means slow business growth. For many MSMEs, market access challenges are a day-to-day reality.

7. Infrastructure Issues

You may be dealing with regular power cuts, poor internet, or bad roads. These aren’t just inconvenient; they can result in real business losses if you miss deadlines or can’t deliver products on time.

8. Tough Competition

Big companies and cheap imports put constant pressure on your margins. Even your best efforts can sometimes seem small against the resources that larger players can bring to the table.

9. Low Awareness About Government Schemes

The government offers many beneficial schemes for credit, subsidies, and tech upgrades, but most MSME owners aren’t fully aware of these. Schemes like the Prime Minister Employment Generation Programme (PMEGP), Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), or Pradhan Mantri Mudra Yojana (PMMY) are underutilised simply due to a lack of information.

10. Weak Business Planning

Many MSMEs start without a clear plan for growth. Running daily operations without defined goals, budgets, or a market strategy can limit your business potential. Without proper planning, it’s easy to miss opportunities and make costly mistakes that could have been avoided.

How to Tackle Problems faced by MSME sector?

Here are practical steps you can take to overcome the common challenges faced by MSMEs in India.

• Make Use of Government Platforms
  Register your MSME on Udyam and look for well-known schemes like Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) for collateral-free loans, Government e-Marketplace (GeM) for online procurement, and the Technology Upgradation Fund Scheme (TUFS) for equipment subsidies.
• Try Digital Lending and Fintech Solutions
  Explore collateral-free loans from digital lenders or Non-Banking Financial Companies (NBFCs) that serve MSMEs. This can ease your credit crunch and help you grow without large assets.
• Keep Finances in Check
  Stay disciplined, track expenses, set aside emergency funds, and avoid over-borrowing. Sound financial management always pays off. For delayed payments, you can take help from the MSME Samadhan portal by filing an application.
• Streamline Compliance
  Use online portals and apps to manage your GST filings, payroll, and other paperwork. This saves you time and reduces the risk of errors.
• Adopt Digital Tools
  Start small with free or affordable digital tools such as digital payments, simple online accounting, or using WhatsApp for business. Every step makes your work easier and more transparent.
• Focus on Training and Skilling
  Try to upskill yourself and your staff. Look for online courses, government training programmes such as the Entrepreneurship and Skill Development Programme (ESDP), Skill India, and the MSME Digital Saksham platform. These can be a big boost, helping you build a skilled team for higher productivity.
• Upgrade Quality Standards
  Work on quality certifications and sustainability practices, even if you start small. It helps you reach larger buyers.

To Sum Up

Running an MSME has challenges, but knowing them helps you act smart. Use government schemes, technology, adopt simple digital tools, and upskill your team to boost growth. Success comes from preparing well and adapting continuously. Stay prepared, adapt quickly, and keep moving forward confidently.