By Sundararaman Ramamurthy
India’s economic transformation is increasingly being shaped by its smallest businesses. Micro, Small and Medium Enterprises (MSMEs) are no longer peripheral participants in the country’s growth story; they are among its most important drivers. Contributing over a third of manufacturing output, nearly half of exports, and close to a third of GDP, MSMEs represent both the inclusiveness and resilience of the Indian economy. As the second-largest source of employment after agriculture, they play a critical role in creating livelihoods, fostering entrepreneurship, and driving regional development.
Yet, global experience suggests that India has only begun to unlock the full potential of its MSME sector. In the United States, small businesses account for almost all enterprises and contribute significantly to GDP and employment. In China, SMEs form the backbone of the economy, generating the majority of economic output, innovation, and urban employment. These examples demonstrate that while India’s MSMEs have made remarkable progress, there remains substantial scope for them to deepen their contribution to economic growth.
The next phase of India’s development will depend not merely on creating more enterprises, but on enabling a larger number of them to evolve into enduring institutions — businesses that are scalable, resilient, professionally governed, and globally competitive. Such enterprises have the ability to create sustained economic value, generate employment at scale, and contribute meaningfully to the vision of a developed India.
At the heart of this transformation lies access to growth capital. While debt financing can provide stability and support day-to-day operations, equity capital enables businesses to scale. Beyond funding, equity brings governance standards, greater transparency, strategic discipline, and the ability to invest confidently in long-term opportunities. This transition from managing survival to pursuing scale is what ultimately distinguishes an institution from a small business.
Recognising this need early, BSE pioneered India’s SME platform to create a credible pathway for smaller enterprises to access public markets. The results have been encouraging. More than 730 companies have collectively raised over `16,000 crore, achieving a combined market capitalisation exceeding Rs 2.10 lakh crore. Significantly, over 200 of these companies have successfully migrated to the mainboard, demonstrating their ability to grow, mature, and compete on a larger stage.
Accessibility has also improved considerably. Historically, the listing process was often perceived as complex and time-consuming. Today, technology is helping simplify the journey. AI-enabled validation tools allow companies and intermediaries to assess documentation readiness more efficiently, while process improvements have reduced listing timelines further. These advancements are making capital markets increasingly accessible to SMEs across the country.
Perhaps most encouraging is the shift in mindset among MSMEs themselves. Average issue sizes have increased from around Rs 10 crore to nearly Rs 50 crore, reflecting growing investor confidence as well as a greater willingness among entrepreneurs to pursue expansion at scale. This evolution signals a new level of ambition within India’s entrepreneurial ecosystem.
However, the true value of capital markets extends beyond fundraising. Listing encourages discipline. It strengthens governance frameworks, improves transparency, and enhances credibility with customers, suppliers, employees, and investors. Over time, these qualities become competitive advantages that help enterprises build trust, attract talent, and sustain long-term growth. In many ways, public markets serve as a catalyst for institution-building.
India’s capital markets, supported by strong regulation, robust infrastructure, and a rapidly expanding investor base, are well positioned to accelerate this transformation. As India advances towards the vision of Viksit Bharat, the challenge and opportunity are clear: empowering MSMEs may well be one of the most important economic priorities of the coming decade.
(The author is MD & CEO at BSE )
Disclaimer: The views expressed are the author’s own and do not reflect the official policy or position of Financial Express.