By Aditya Baldawa
India’s Micro, Small and Medium Enterprises (MSMEs) – over 6.3 crore strong – are the backbone of the nation’s economy, contributing nearly 30% to GDP and accounting for more than 62% of the country’s workforce. Yet, despite their scale and significance, many MSMEs have long struggled with a persistent challenge: the high upfront capital costs required for IT infrastructure.
For many MSMEs, investing in modern IT servers, networking, software, has meant locking up precious capital, often at the expense of growth or innovation. This challenge has only intensified as the pace of digital transformation accelerates across India’s business landscape.
A shift in strategy: Leasing as a game changer
It is believed that leasing IT infrastructure is not merely an alternative but a strategic advantage for MSMEs. Leasing IT infrastructure is a competitive advantage. MSMEs adopting a leasing model can scale faster, innovate more freely, and allocate capital where it drives real business outcomes.
Recent industry data supports this view: leasing can drive revenue growth of 10–20% for MSMEs by freeing up capital and enabling access to the latest technologies without the burden of large upfront investments. In fact, Indian businesses save about 20–25% in capital expenditure through leasing arrangements, which is crucial for MSMEs operating with tight budgets.
Policy tailwinds: Union Budget 2025 and MSME reclassification
The Union Budget 2025 has further set the stage for MSME growth by revising classification thresholds: microenterprises can now invest up to Rs 2.5 crore, small enterprises up to Rs 25 crore, and medium enterprises up to Rs 125 crore, with turnover ceilings doubled as well. This move is designed to help MSMEs scale operations, access more benefits, and invest in modernisation without the fear of losing their MSME status.
Leasing IT assets—ranging from servers to software licenses—converts capital expenditure (CAPEX) into operational expenditure (OPEX), unlocking capital for core business functions like marketing, R&D, and talent acquisition.
MSMEs and small companies can witness dynamic results:
-Enhance EBITDA margins by 5–10% by avoiding asset depreciation and reducing operating costs.
-Boost Profit After Tax (PAT) by 8–15% through lower tax liabilities and elimination of Capex-related interest.
-Improve agility, allowing MSMEs to stay technologically current and scale IT resources with real-time demand.
Digital transformation: The leasing advantage
As India’s MSMEs embrace digital transformation, leasing offers an affordable path to adopt cloud-based models such as Infrastructure as a Service (IaaS), Software as a Service (SaaS), and Hardware as a Service (HaaS). This flexibility is particularly valuable in fast-changing sectors like fintech, edtech, and health-tech, where technology needs can shift rapidly.
The momentum for modernisation
By the end of 2024, more than 5.93 crore MSMEs employing over 24 crore people had registered on government platforms like the Udyam Registration Portal and Udyam Assist Platform1. Additionally, 24.77 lakh artisans were enrolled under the PM Vishwakarma Yojana, highlighting the sector’s appetite for modernisation and digital adoption.
Looking ahead
With supportive policy changes, increased awareness, and innovative financial models like IT leasing, India’s MSMEs are well-positioned to accelerate their digital transformation. Baldawa notes that leasing models help MSMEs stay technologically agile, avoid asset obsolescence, and match capacity with real-time demand—a message that resonates as India’s MSMEs step confidently into a new era of growth.
The author is Co-Founder at C-Prompt Solution
Disclaimer: Views expressed are personal and do not reflect the official position or policy of FinancialExpress.com. Reproducing this content without permission is prohibited.