MSME Sampark on the latest in MSME lending ecosystem' by U GRO Capital AND DUN & BRADSTREET

India's Micro, Small and Medium Enterprises (MSMEs) have emerged as key contributors to the country's economic revival following the COVID-19 pandemic, according to the latest 'MSME Sampark Bi-annual report on the latest in MSME lending ecosystem' by U GRO Capital and Dun & Bradstreet. The report analyzes the current state of the Indian MSME sector, shedding light on its resilience, credit scenario, and growth prospects.

Positive Outlook for MSMEs:

The report reveals a significant uptick in the contribution of MSMEs to India's Gross Value Added (GVA) from FY21 to FY22, signaling a positive trend post the pandemic. Shachindra Nath, Founder and Managing Director of U GRO Capital, emphasizes the critical role played by MSMEs in shaping India's economic destiny, citing their resilience, innovation, and contribution to economic growth and employment.

Optimism for Domestic Demand and Profitability:

Avinash Gupta, MD & CEO - India, Dun & Bradstreet, highlights the optimism for domestic demand and profitability in the MSME sector. The report anticipates increased capital expenditure and hiring by MSMEs, fostering overall growth momentum.

MSME Segment Post-Pandemic:

India, among the fastest-growing major economies, witnessed a 7.6% growth in real gross domestic product (GDP) in the July-September quarter of 2023. The report indicates a good recovery in smaller entities, with over 50% experiencing Year-on-Year (YoY) growth exceeding 10%. The study, spanning three years and covering 25,000+ MSMEs, reveals a dip in business and sales activity during the pandemic, followed by a robust recovery, resulting in improved risk levels and lower delinquency rates.

Credit Standing and Formalization:

MSMEs are recognizing the importance of formal recognition to access credit and government schemes. Since the inception of UDYAM in 2020, MSME registrations on the platform have surged 2.4 times, generating 1.6 times more employment opportunities by FY23. The formalization of credit is expected to increase as the government actively promotes MSME formalization.

Increasing Ticket Size of Credit:

Post-COVID-19, the report notes an increase in the ticket size of loans to MSMEs, reflecting cautiousness after the removal of pandemic relief measures. Credit penetration is observed across sectors, with Maharashtra, Gujarat, and New Delhi leading in debt distribution. Sectors such as Light Engineering, Hospitality, and Healthcare attract the most debt.

Key Sector Highlights:

The report provides insights into various sectors, including Light Engineering, Food Processing, Electrical Equipment, Chemical Industry, Healthcare, and Auto Component, showcasing their market dynamics, debt distribution, and credit penetration.

Conclusion and Future Outlook:

The report concludes that MSMEs continue to demonstrate resilience and growth, contributing nearly a third to India's GDP. Despite the global economic slowdown, optimism among small businesses reached its peak in Q4 2023. Dun & Bradstreet's risk rating score indicates a moderation in risk, enhancing borrowing prospects for MSMEs.

Methodology and About the Organizations:

The report leverages public and Dun & Bradstreet's data cloud, analyzing the health and credit requirements of the MSME segment. U GRO Capital, a DataTech Lending platform, and Dun & Bradstreet, a global provider of business decisioning data, collaborated to produce this insightful report.

For more information, visit U GRO Capital and Dun & Bradstreet.