Can India’s Medium Enterprises Lead the Next Economic Revolution? NITI Aayog Thinks So

What if India’s next economic leap isn’t powered by unicorns or large conglomerates, but by an often-overlooked middle tier of enterprises—quietly innovating, exporting, and employing thousands across the country?

That’s the big bet NITI Aayog is making.

In a landmark policy move, the country’s top policy think tank has unveiled a strategic roadmap aimed at transforming medium enterprises—the smallest segment by numbers within the MSME universe—into major growth engines for India’s economy.

Titled "Designing a Policy for Medium Enterprises", the comprehensive report was officially released in New Delhi by NITI Aayog Vice Chairman Suman Bery, alongside senior members Dr. V.K. Saraswat and Dr. Arvind Virmani.

While micro and small enterprises have often dominated the discourse around MSMEs, this new focus on medium enterprises marks a significant shift. A shift that could unlock new energy in India’s bid to become a global manufacturing and innovation powerhouse.

The Forgotten Middle: Small Base, Big Impact

Let’s unpack some numbers. Of the 6.3 crore registered MSMEs in India:

• 97% are micro enterprises

• 2.7% are small

• Only 0.3% fall in the medium category

But don’t let that last figure fool you.

Despite their tiny share in numbers, medium enterprises contribute to a staggering 40% of total MSME exports. This makes them not just contributors, but champions in India’s global trade landscape.

These are the enterprises that have outgrown their humble beginnings but haven’t yet reached the size or scale of large corporations. They are agile, innovation-driven, and often operate in high-value sectors. Think of them as India’s “silent scalers”—firms that are export-ready, technologically savvy, and waiting for the right push.

What’s Holding Them Back?

So why aren’t they already leading India’s industrial revolution?

The report paints a candid picture of the challenges medium enterprises face:

• Financing gaps – Traditional loan products don’t cater to their unique needs.

• Low technology penetration – Most haven’t embraced Industry 4.0 or smart manufacturing.

• Negligible R&D support – There’s little to no institutional help for innovation.

• Lack of testing infrastructure – Certification and compliance become bottlenecks.

• Workforce mismatch – Skills of available talent often don’t align with enterprise requirements.

These hurdles, individually and collectively, limit their growth and hold them back from competing globally.

The Six-Pillar Reform Blueprint

To address these challenges, NITI Aayog has proposed a bold six-pillar policy framework, aimed at enabling medium enterprises to scale, innovate, and compete globally.

Here’s a quick breakdown:

1. Financial Solutions, Tailored and Timely

• A turnover-linked working capital scheme

• A credit card facility up to ₹5 crore at market-linked interest rates

• Streamlined fund disbursals via retail banks under MSME Ministry oversight

2. Embracing Technology & Industry 4.0

• Upgrading existing Technology Centres into India SME 4.0 Competence Centres

• Region-specific tech support for smart manufacturing adoption

3. Innovation Backed by R&D

• A dedicated R&D cell within the MSME Ministry

• Utilisation of the Self-Reliant India Fund for high-impact cluster-based innovation

4. Testing & Certification Infrastructure

• Development of cluster-based testing hubs for key industries

• Streamlined compliance to enhance product quality and global acceptance

5. Custom Skill Development

• Overhaul of existing training programs

• Integration of medium enterprise-specific modules in skill development schemes

6. Centralised Digital Ecosystem

• A new AI-enabled sub-portal under Udyam

• Tools for scheme discovery, compliance assistance, and business facilitation

This framework is not just a wishlist—it is a call to action for coordinated efforts between the government, financial institutions, and industry players.

Viksit Bharat @2047: Medium Enterprises in the Driver’s Seat

The roadmap ties directly into the government’s larger vision of “Viksit Bharat @2047”—a blueprint to make India a developed economy by the time it celebrates 100 years of independence.

Medium enterprises, with the right push, could be the bridge between small-scale promise and large-scale powerhouses. They can:

• Create lakhs of high-quality jobs

• Drive exports and foreign exchange inflow

• Serve as innovation labs for cutting-edge solutions

• Anchor regional economic growth

Vice Chairman Suman Bery summed it up perfectly during the launch, stating,

“With targeted policy interventions and the right institutional support, medium enterprises can lead India’s next wave of economic transformation.”

Why Startups and Investors Should Care

While the report focuses on medium enterprises, its implications go far beyond traditional manufacturing. For startups, especially those in deeptech, fintech, SaaS, green energy, and supply chain innovation, this could open up:

• New B2B opportunities with medium enterprises embracing tech

• Partnership potential for R&D and skilling

• Funding demand for innovation tools and platforms catering to these enterprises

For investors, it’s a signal to watch this emerging segment closely. The MSME sector has long been touted as the backbone of India’s economy, but within that backbone lies a spine of high-value medium enterprises ready to sprint—if given the room to run.

Policy papers are only as effective as their implementation. The success of this roadmap will depend on how swiftly and seamlessly its proposals are translated into action on the ground.

• Will banks adapt to meet the new financing norms?

• Can the government mobilise adequate R&D funds and testing hubs?

• Will regional skill centres actually match industry needs?

These are questions that will define the journey ahead.

India’s “Next 500” May Already Be Here

India’s startup ecosystem has produced over 100 unicorns. But it’s time we also start looking at India’s “Next 500”—medium-sized enterprises that may never make headlines, but have the potential to change the economic narrative from the ground up.

With the right policies, timely support, and a renewed national focus, India’s medium enterprises could very well become its next economic heroes.

Let’s just hope they get their due.