It pleases me to know that despite all the challenges faced by our MSMEs they have created over 340 million jobs in the last decade. They struggle with accessing credit, registration hurdles, delayed payments, government benefits, and navigating the complicated formalization process. Nevertheless they rose above all hurdles to reiterate the fact that they still remain the backbone of our country’s economy.

Meanwhile, as if all these hindrances were not enough, recent reports now sadly indicate that many MSMEs feel pressured to deregister their businesses due to big corporations preferring to work with unregistered MSMEs. Interestingly this preference arises because unregistered businesses do not fall under the 45-day payment rule established by the government for MSME buyers, a slap in the face of all the myopic decisions taken by our think-tank. 

While registrations on the Udyam portal have risen to over 6.5 crore (up from 4.7 crore in 2024), no one keeps a track of the tens of thousands of MSMEs who have deregistered, likely out of fear of losing buyers because of the payment rule, at least this statistics is not in the public domain.

To make matters worse, delayed payment which has been an ongoing issue, has worsened in recent years. The government introduced the Samadhan portal to address payment problems, but the resolution rate is alarmingly low. Small businesses often lack the financial and legal resources to engage in prolonged disputes with large corporations. As a result, delayed payments create a shortage of working capital, directly impacting their ability to grow. And yet again the 45-day payment rule, initially meant to empower MSMEs, is now a barrier to their growth.

In my view, a one-size-fits-all approach is not effective across all industries due to varied business cycles. For instance, if we look at the textile industry, orders are seasonal and payment cycles are longer. So, instead of having a universal 45 day payment rule, a tiered system could be explored, allowing 90 or even 120 days for sectors with inherently extended supply chains like textiles and heavy manufacturing, while maintaining stricter limits for fast-moving consumer goods. Strict enforcement of this policy in every sector causes order losses, disrupts supply chains, and finally pushes MSMEs to operate informally and it also undermines the government's efforts to promote formalization of our MSMEs through registration. 

If we want our MSMEs to thrive and not just survive, we need to move past blanket policies. A flexible sector-specific approach that meets the unique needs of different industries is essential for building a resilient and empowered MSME ecosystem.