NITI Aayog Report: Achieving Efficiencies in MSME Sector through Convergence of Schemes

Source: PIB | Subject: Economy

Context

In January 2026, NITI Aayog released a comprehensive report advocating convergence of MSME schemes to reduce duplication, improve administrative efficiency, and strengthen last-mile delivery. The report reflects a shift from scheme proliferation to outcome-oriented governance.

About the Report

What is the Report?

Prepared by the Administrative Staff College of India (ASCI) for NITI Aayog.
Analyses 18 centrally administered MSME schemes.
Recommends information, institutional, and process convergence to enhance:
- Inter-ministerial coordination
- Resource utilisation
- Measurable outcomes for MSMEs

MSME Sector: Key Facts

GDP Contribution: ~29–30% of India’s GDP
Employment: Over 28.7 crore, second only to agriculture
Exports: 45–46% of India’s exports (though only ~1% are direct exporters)
Scale & Spread: 6.3+ crore MSMEs, with ~51% in rural areas
Rising Public Support:
- Budget outlay increased from ₹6,717 crore (2019–20) to ₹22,094 crore (2023–24)
- Heightens the need for efficient, non-duplicative delivery mechanisms

Rationale for Scheme Convergence

1. Unified Digital Access

Multiple portals create information asymmetry and high compliance costs.
A single digital window can streamline:
- Scheme discovery
- Eligibility checks
- Application and grievance redressal

2. Cluster Development Rationalisation

Overlapping cluster schemes dilute funding and governance.
Convergence can:
- Improve infrastructure quality
- Enable economies of scale
- Enhance collective competitiveness

3. Skill Programme Alignment

Fragmented skilling schemes often target identical beneficiaries.
Alignment can:
- Reduce duplication
- Improve industry linkage
- Enhance employability outcomes

4. Marketing Support Integration

Dispersed schemes limit scale and visibility.
Integration enables coordinated domestic and export promotion.
Example:
- A Unified Marketing Assistance Wing can streamline MSME participation in:
  - India International Trade Fair
  - Buyer–seller meets
  - Overseas expos

5. Innovation Ecosystem Consolidation

Parallel incubation schemes fragment funding and mentoring.
Convergence strengthens innovation pipelines, especially in rural areas.
Example:
- Integrating ASPIRE into MSME Innovative can combine:
  - Grassroots agro-rural innovation
  - Advanced incubation infrastructure

Key MSME-Focused Initiatives (Existing)

Udyam Registration & Udyam Assist Platform:
- Digital formalisation, improved access to credit, schemes and markets
PMEGP & PM Vishwakarma:
- Promote entrepreneurship, self-employment and traditional artisan livelihoods
CGTMSE & SRI Fund:
- Collateral-free credit and equity infusion to reduce financing gaps
RAMP Programme:
- Enhances productivity, resilience and global competitiveness
GeM & Public Procurement Policy:
- Assured market access through mandatory government procurement from MSMEs

Challenges in Scheme Convergence

1. Inter-Ministerial Silos

Jurisdictional control limits data sharing and coordination.
Example:
- Overlaps between MSME Ministry and Rural Development Ministry in coir and village industries have delayed unified cluster governance.

2. Risk of Diluting Targeted Schemes

Broad convergence may weaken focus on vulnerable groups.
Example:
- National SC/ST Hub requires ring-fenced funding and autonomy to avoid marginalisation.

3. Capacity Constraints at Field Level

Implementing agencies face skill and infrastructure gaps.
Example:
- District Industries Centres (DICs) show uneven capacity across states.

4. Data Integration Issues

Legacy IT systems hinder real-time coordination.
Example:
- State MSME dashboards often do not integrate seamlessly with Udyam.

5. Transition Risks for Beneficiaries

Abrupt mergers may disrupt ongoing benefits and delay disbursements.

Key Recommendations of the Report

1. Centralised MSME Portal

AI-enabled single digital platform integrating:
- Schemes
- Compliance
- Finance
- Market intelligence
Features: dashboards, chatbots, mobile access, real-time support.

2. Cluster Scheme Convergence

Merge SFURTI with MSE-CDP under a dedicated sub-scheme.
Unified governance with consolidated funding, while preserving traditional crafts.

3. Skill Programme Rationalisation

Three-tier framework:
1. Entrepreneurship
2. Technical skills
3. Rural and women artisans
Reduces overlap while ensuring inclusion.

4. Dedicated Marketing Assistance Wing

Unified domestic and international marketing framework for MSMEs.
Streamlines trade fairs, buyer–seller meets and export promotion.

5. Innovation Scheme Integration

Integrate ASPIRE into MSME Innovative as a special agro-rural category.
Earmarked funding for rural incubators with access to advanced infrastructure.

Conclusion

The NITI Aayog report underscores that India’s MSME challenge is no longer the absence of schemes, but fragmented delivery.
Smart, calibrated convergence—backed by digital integration, institutional coordination and protection of vulnerable groups—can transform rising public expenditure into higher productivity, employment generation and export competitiveness, making MSME support simpler, faster and more impactful.

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