DEPARTMENT-RELATED PARLIAMENTARY STANDING COMMITTEE ON INDUSTRY
DEPARTMENT-RELATED PARLIAMENTARY STANDING COMMITTEE ON INDUSTRY
The Department-Related Parliamentary Standing Committee on Industry (Rajya Sabha), chaired by Shri Tiruchi Siva, presented its Three Hundred and Thirty-Third (333rd) Report on the Demands for Grants (2026-27) of the Ministry of Micro, Small and Medium Enterprises (MSME) to the Parliament on 11th March, 2026. The Report covers the Ministry’s budgetary allocations, flagship schemes including PMEGP and PM Vishwakarma, Credit Guarantee Mechanisms, Public Procurement, Delayed Payments, impact of US tariffs on MSMEs, and the functioning of autonomous bodies and institutions under the Ministry.
The Committee examined the Demands for Grants 2026-27 (Demand No. 68) of the Ministry of MSME under Rule 272 of the Rules of Procedure and Conduct of Business in the Council of States (Rajya Sabha). The Committee took oral evidence from the Secretary and other officers of the Ministry, as well as from organisations under its administrative control. MSMEs account for about 31.1 per cent of India’s GDP, 35.4 per cent of manufacturing output and 48.58 per cent of India’s exports, and employ around 32.82 crore persons, with over 7.69 crore enterprises registered on the Udyam Registration Portal and Udyam Assist Platform.
The key recommendations of the Committee contained in the Report are summarised below:
BUDGETARY ALLOCATIONS: GECL PROVISION AND EFFECTIVE DEVELOPMENTAL OUTLAY
The Committee noted that the Budget Estimates (BE) 2026-27 for the Ministry stand at ₹24,566.27 crore, comprising ₹22,647.26 crore in revenue expenditure and ₹1,919.01 crore in capital expenditure. However, the Committee flagged that ₹9,000 crore — 36.6 per cent of the total outlay — has been provisioned under the Guaranteed Emergency Credit Line (GECL), despite actual GECL expenditure being nil in both FY 2024-25 and FY 2025-26, and the ECLGS scheme having closed operationally on 31 March 2023. This “phantom allocation” inflates headline numbers and masks the effective developmental outlay, which stands at approximately ₹15,566 crore after excluding GECL.
The Committee observed that the Revised Estimates (RE) for FY 2025-26 were barely 52.2 per cent of BE, and an extraordinary 76.53 per cent of total expenditure in FY 2023-24 was incurred in the last quarter alone, indicating persistent back-loaded spending and systemic weaknesses in expenditure planning.
Key recommendations of the Committee:
SIX OUT OF EIGHT BUDGET 2025-26 ANNOUNCEMENTS FOR MSMEs REMAIN UNIMPLEMENTED
The Committee noted with serious concern that of eight Budget 2025-26 announcements relevant to MSMEs, only two — both led by the MSME Ministry — have been operationalised. The remaining six, where the Ministry is a supporting agency, continue to languish at draft stage or in inter-ministerial consultations. Two announcements of particular significance — credit cards for micro enterprises (targeted at 10 lakh enterprises in year one) and term loans of up to ₹2 crore for five lakh women and SC/ST first-time entrepreneurs — remain completely unimplemented nearly twelve months after announcement.
Key recommendations of the Committee:
BUDGET 2026-27: ‘CREATING CHAMPION MSMEs’
The Union Budget 2026-27 introduced a “Creating Champion MSMEs” strategy through Equity Support (₹10,000 crore SME Growth Fund; ₹2,000 crore top-up to SRI Fund), Liquidity Support (mandatory TReDS for CPSEs, CGTMSE guarantee for invoice discounting, GeM-TReDS linkage) and Professional Assistance (Corporate Mitras programme). However, the Committee noted that several announcements lack explicit budget-head mapping, raising questions about their implementability.
Key recommendations of the Committee:
PMEGP: 87 LAKH JOBS GENERATED, BUT OUTDATED ₹50 LAKH PROJECT CEILING AND 40-50% BANK REJECTION RATES HOLD BACK INDIA’S LARGEST MICRO-ENTERPRISE SCHEME
The Prime Minister’s Employment Generation Programme (PMEGP), in operation since 2008-09, has been allocated ₹4,500 crore in BE 2026-27 — a significant increase from ₹2,954 crore in BE 2025-26. Since inception up to 31 December 2025, PMEGP has supported about 10.73 lakh micro-enterprises with margin-money subsidy of approximately ₹29,295 crore and generated an estimated 87 lakh jobs. Nearly 80 per cent of units are rural, over 50 per cent are owned by women, SC and ST entrepreneurs and about 15 per cent are in aspirational districts.
However, the Committee’s ground assessment during study visits revealed critical structural constraints: the ₹50 lakh project-cost ceiling for manufacturing is widely seen as outdated and misaligned with current capital requirements; bank rejection rates remain at 40–50 per cent driven by risk-averse practices and excessive CIBIL-score reliance; post-sanction handholding and mentoring are weak; and chronic manpower shortages in KVIC, DICs and field offices constrain delivery.
Key recommendations of the Committee:
PM VISHWAKARMA: REACHING 30 LAKH TRADITIONAL ARTISANS IN TWO YEARS
The PM Vishwakarma Scheme, launched on 17 September 2023 with an outlay of ₹13,000 crore, has achieved its registration target of 30 lakh beneficiaries within two years — far ahead of the original five-year timeline. Toolkit e-RUPI vouchers have been issued to 25.5 lakh beneficiaries; loans of about ₹4,748 crore have been sanctioned to 5.5 lakh beneficiaries (₹3,873 crore disbursed to 4.66 lakh); and 12.82 lakh toolkits have been delivered through India Post. The BE for 2026-27 stands at ₹3,860.89 crore, reduced from ₹5,100 crore in BE 2025-26.
The Committee’s ground assessment found that early registration success has not yet translated into proportionate training, toolkit utilisation and credit outcomes. Verification bottlenecks at Gram Panchayat/Urban Local Body level, high attrition across the beneficiary pipeline, credit rejection at higher bank levels and the restrictive 18-trade framework remain key constraints. The Committee expressed particular concern that trade nomenclature continues to use region-specific and caste-associated names (e.g. Naai, Charmakar, Kumhaar, Dhobi), which risks reinforcing occupational rigidities and has contributed to reluctance or non-adoption in some States.
Key recommendations of the Committee:
₹8.1 LAKH CRORE LOCKED IN DELAYED PAYMENTS TO MSMEs — ONLINE DISPUTE RESOLUTION PORTAL DISPOSES JUST 17 CASES IN EIGHT MONTHS
The Committee flagged delayed payments as one of the most critical structural challenges facing MSMEs. The Economic Survey 2025-26 estimates approximately ₹8.1 lakh crore locked in delayed payments. The MSME Samadhaan Portal records 2,56,892 applications involving ₹55,244.31 crore. Despite the launch of the Online Dispute Resolution (ODR) Portal on 15 October 2025, only 17 cases have been disposed through it in eight months, underscoring the grossly inadequate pace of resolution.
Key recommendation of the Committee:
CREDIT GUARANTEE (CGTMSE): ₹12.39 LAKH CRORE IN GUARANTEES, BUT COLLATERAL-FREE INTENT DILUTED AT BANK BRANCHES
The Credit Guarantee Scheme, operated through CGTMSE, has extended 1.35 crore guarantees amounting to ₹12.39 lakh crore since inception up to 31 December 2025, with the guarantee ceiling raised to ₹10 crore per borrower from April 2025. However, the Committee’s ground-level interactions in Kolkata and other locations revealed a perceptible gap between policy intent and implementation: banks continue to demand collateral in practice; excessive reliance on CIBIL scores excludes youth and first-generation entrepreneurs; effective borrowing costs are inflated by guarantee fees, bank charges and insurance premiums; and awareness in rural and semi-urban areas remains limited.
Key recommendations of the Committee:
US TARIFFS ON INDIAN EXPORTS: STRENGTHENING SUPPORT MECHANISMS FOR AFFECTED MSMEs
The Committee noted that the United States imposed tariffs totalling approximately 50 per cent on Indian exports effective 27 August 2025, directly impacting MSME-intensive sectors including textiles and apparel, engineering goods, hand tools, chemicals and auto components. The Committee observed that the Ministry’s response has been largely reactive and lacks a sector-specific, proactive strategy for MSME-intensive export clusters.
Key recommendations of the Committee:
99.3% OF MSMEs ARE MICRO — COMMITTEE REITERATES DEMAND FOR ‘NANO ENTERPRISE’ CATEGORY
The Committee noted that out of 7.61 crore MSMEs registered on the Udyam portal, an overwhelming 7.56 crore (99.3 per cent) fall under the micro category, while only about 4.88 lakh are small and approximately 36,816 are medium enterprises. The revised upward classification limits risk allowing comparatively larger enterprises to remain within the micro segment, diluting benefits for genuinely small and household-level enterprises. The Committee noted that the Government of Kerala has already operationalised a Nano Enterprise category with investment up to ₹10 lakh, demonstrating administrative feasibility.
Key recommendation of the Committee:
PUBLIC PROCUREMENT: MSE TARGET EXCEEDED AT 47%, BUT SC/ST PROCUREMENT AT 1.85% — LESS THAN HALF THE MANDATED 4%
Overall MSE procurement by CPSEs has risen to 47.4 per cent of total procurement, significantly exceeding the mandated 25 per cent. Women-owned MSE procurement has improved to 3.46 per cent, approaching the 3 per cent target. However, SC/ST-owned MSE procurement remains critically low at 1.85 per cent — less than half the mandated 4 per cent — representing a cumulative shortfall of approximately ₹18,000–20,000 crore over six years. In FY 2023-24, 76 CPSEs were penalised for SC/ST sub-target non-compliance, but negative marking has not translated into tangible corrective action.
Key recommendations of the Committee:
INFRASTRUCTURE AND TECHNOLOGY: UP TO 75% BE-TO-RE COLLAPSE IN KEY SCHEMES
A chronic pattern of high Budget Estimates followed by sharp Revised Estimates reductions was observed in infrastructure and technology schemes: SFURTI saw a 61 per cent reduction, New Technology Centres/Extension Centres 75 per cent, and TCSP 43 per cent in FY 2025-26. Root causes include land transfer delays by State Governments, failure of the PPP mode to attract private sector response, contractor non-performance and slow procurement.
Key recommendation of the Committee:
SRI FUND: ₹16,260 CRORE INVESTED IN 693 MSMEs, CAPITAL ALLOCATION RAISED TO ₹1,900 CRORE
The Self-Reliant India (SRI) Fund, with an approved corpus of ₹50,000 crore, has channelled ₹16,260 crore in total investments into 693 MSMEs through 69 empanelled Daughter Funds. The capital allocation has been raised significantly to ₹1,900 crore in BE 2026-27, from ₹700 crore in BE 2025-26. Among assisted enterprises, 90 are women-led.
Key recommendation of the Committee:
KVIC AND NSIC: STEADY GROWTH, BUT SCALE NEEDS TO MATCH SECTOR AMBITION
KVIC recorded Khadi production of ₹3,784.52 crore and sales of ₹7,145.61 crore in 2024-25, with Village Industries crossing ₹1 lakh crore in production. Employment in the Khadi sector remains around 5 lakh persons.
NSIC recorded revenue of ₹3,431 crore and profit after tax of ₹146.30 crore in FY 2024-25, paying its highest-ever dividend of ₹43.89 crore. The recent upgradation of NSIC from Schedule ‘B’ to Schedule ‘A’ CPSE status (announced February 2026) underscores its growing strategic importance.
Key recommendations of the Committee:
CONCLUDING OBSERVATIONS
The Committee’s Report contains a comprehensive set of recommendations aimed at strengthening the effectiveness of the Ministry’s flagship schemes, correcting budgetary distortions caused by the GECL phantom allocation, accelerating implementation of Budget announcements, shielding MSMEs from the impact of US tariffs, resolving the ₹8.1 lakh crore delayed payment crisis, ensuring inclusive public procurement, recalibrating PMEGP and PM Vishwakarma for ground-level impact, and building institutional competitiveness through technology, infrastructure and credit ecosystem reforms. The Committee has emphasised the need for realistic budgeting, outcome-based monitoring, time-bound implementation, and transparent reporting to Parliament.
Note: The full text of the Report, as presented to Parliament, is available on the Rajya Sabha website at: https://sansad.in/rs → Committees → Department-related Standing Committees → Industry → Reports.