NITI Aayog Proposes Sweeping Reforms for MSME Sector Through Scheme Convergence

NITI Aayog Unveils Blueprint for MSME Efficiency

New Delhi, India – On January 15, 2026, NITI Aayog released a comprehensive report titled 'Achieving Efficiencies in MSME Sector through Convergence of Schemes', outlining a strategic roadmap to strengthen government support for India's Micro, Small, and Medium Enterprises (MSMEs). The report, prepared by the Administrative Staff College of India (ASCI) for NITI Aayog, was launched by Dr. Arvind Virmani, Member, NITI Aayog, and B.V.R. Subrahmanyam, Chief Executive Officer, NITI Aayog.

The initiative stems from the observation that the Ministry of MSME currently administers 18 schemes with overlapping objectives and fragmented implementation across various ministries. This has led to duplication, inefficiencies, and limited outreach, hindering the sector's full potential. The report emphasizes that effective convergence and rationalization of these schemes can simplify access for beneficiaries, reduce confusion, and ensure better translation of public resources into tangible outcomes.

Two-Pronged Approach to Convergence

The NITI Aayog's report proposes a two-pronged strategy for achieving scheme convergence:

• Information Convergence: This involves integrating government-generated data at both central and state levels. The goal is to improve coordination, enable informed decision-making, and strengthen governance outcomes across various schemes.
• Process Convergence: This focuses on aligning and unifying schemes by merging similar initiatives, combining common operational components, and fostering collaboration among ministries and states. This approach aims to reduce redundancies and streamline service delivery.

These strategies are designed to create a more cohesive and outcome-driven MSME support ecosystem, maximizing public investment and accelerating inclusive economic growth.

Key Recommendations for Reform

The report puts forth several key recommendations to facilitate this convergence and enhance the MSME sector's efficiency:

• Centralized Digital Portal: A major proposal is the creation of an AI-powered single digital platform for MSMEs. This portal would integrate information on schemes, compliance requirements, finance options, and market intelligence, offering real-time support through dashboards, chatbots, and mobile access.
• Cluster Development Rationalization: The report recommends merging the Scheme of Fund for Regeneration of Traditional Industries (SFURTI) with the Micro and Small Enterprises – Cluster Development Programme (MSE-CDP). This aims to improve scale, infrastructure quality, and collective competitiveness.
• Skill Programme Rationalization: To address fragmented skilling initiatives, the report suggests restructuring MSME skilling into a three-tier framework. This framework would cover entrepreneurship, technical skills, and specialized training for rural and women artisans, reducing overlap while retaining targeted inclusion.
• Dedicated Marketing Assistance Wing: A unified domestic and international marketing wing is proposed to streamline MSME participation in trade fairs, buyer-seller meets, and export promotion activities.
• Innovation Scheme Integration: The report suggests integrating ASPIRE (A Scheme for Promoting Innovation, Rural Industry & Entrepreneurship) into MSME Innovative as a special agro-rural category, broadening access to advanced incubation.

The report also emphasizes safeguarding large flagship programs such as the Prime Minister's Employment Generation Programme (PMEGP) and PM Vishwakarma, along with targeted initiatives like the National SC/ST Hub and the Promotion of MSMEs in the North Eastern Region, allowing them to remain independent due to their strategic importance and scale.

Significance of the MSME Sector

The MSME sector is a cornerstone of the Indian economy, contributing approximately 29-30% of India's GDP and employing over 28.7 crore people, second only to agriculture. It also accounts for about 45-46% of India's exports. With over 6.3 crore MSMEs, approximately 51% of which are located in rural areas, the sector highlights both inclusiveness and the challenges of informality. The government's budget outlay for MSMEs has significantly increased from ₹6,717 crore in 2019–20 to ₹22,094 crore in 2023–24, underscoring the growing need for efficient delivery mechanisms.