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India’s MSMEs Digitally Ahead of OECD Counterparts but Only 18% as Productive
Deloitte Report: According to a Deloitte India report, the productivity of India's MSME sector is only 18% of that of large enterprises, compared to 45–70% in OECD countries. Limited access to formal credit, outdated technology, and weak infrastructure are major challenges. However, the report highlights their digital readiness as a positive sign.
The structural problems of Micro, small, and medium enterprises (MSMEs) in India include limited access to formal credit. This affects the productivity of MSMEs. However, their digital readiness is a bright spot. At the same time, Indian MSMEs have been found to be far more digitally ready than their Organisation for Economic Co-operation and Development (OECD) peers and yet operate at only 18% of the productivity of large enterprises.
In OECD economies, this is 45–70%. This gap limits their competitiveness compared to global peers. India's MSME sector, which contributes about 30 percent to GDP, also struggles with outdated technology, regulatory complexities, and infrastructure issues, said Rumki Mazumdar, economist at Deloitte India.
According to Deloitte's MSME Challenge Index, MSMEs in sectors such as ready-made garments face severe credit constraints due to high risk. These include low profitability and intense global competition, making their products difficult to replace. The MSME sector contributes 45 percent to exports and provides livelihoods to over 240 million people.
