NITI Aayog has proposed a dedicated policy framework to strengthen India’s medium enterprises, including concessional working capital loans of up to ₹25 crore and pre-approved credit cards with limits up to ₹5 crore. The move aims to transform these businesses into globally competitive firms and address a long-standing policy gap that treats micro, small, and medium enterprises as a single category despite their differing needs.
The proposal was outlined in a new report titled Designing a Policy for Medium Enterprises, launched on Monday. The recommendations focus on providing financial, technological, and skilling support tailored specifically for medium-sized firms.
Tailored financing for mid-sized firms
Under the proposed financing scheme, medium enterprises would be able to apply for loans through their local banks at concessional rates. Fast-track approvals for working capital support—based on sector-specific revenue metrics—would be capped at ₹25 crore, with a maximum of ₹5 crore per request.
Medium firms typically face higher capital requirements than their micro and small counterparts. Currently, there is no dedicated financing scheme to address their working capital needs. As per revised classification norms in the FY26 Budget, medium enterprises are those with investments up to ₹125 crore and turnover up to ₹500 crore.
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Driving scale and formalisation
NITI Aayog has emphasised that targeted support for medium companies is crucial to unlock large-scale employment and help India transition towards a more formalised economy. Trends suggest many medium enterprises choose to remain within MSME eligibility limits to retain policy benefits—leading to fragmentation instead of scale.
According to the report, such behaviour inhibits economies of scale. With the right support, medium businesses can grow into globally competitive ventures rather than spawning smaller units to remain within thresholds.
Learning from global benchmarks
Referencing global success stories like Germany’s Mittelstand and Italy’s evolution in the fashion sector, the report argues that India can emulate these models. The country’s rich craft heritage and strong entrepreneurial base can serve as a foundation for similar growth in areas such as engineering, advanced manufacturing, and design.
Medium enterprises also play a key role in research and development, and they typically employ formal labour. These characteristics position them as important agents in the government’s aim to strengthen formal sector participation.
Skilling and tech support as enablers
NITI Aayog has recommended upgrading the Ministry of MSME’s existing technology centres into India MSME 4.0 Competence Centres. These revamped hubs would provide industry-specific skilling and technology services across diverse sectors such as electronics, fragrances and flavours, general engineering, and sports manufacturing.
Industry representatives also called for an updated all-India MSME census, highlighting that the last such exercise took place nearly two decades ago. A new census, they argued, would enable data-driven policymaking and targeted intervention for medium enterprises.
