The micro, small and medium enterprises (MSMEs) in the state continue to struggle to move beyond the micro stage, with structural challenges in markets, skills, finance and infrastructure emerging as key constraints despite ongoing policy interventions, said Prabhat Malik, Director of Industries in the Department of Commerce and Industries, Chhattisgarh government.
In an email interview with BW Businessworld, Malik stated that deepening the MSME middle, not just increasing the number of micro units, will be one of the defining tests of the current policy cycle. He added, ‘’The constraints are increasingly structural rather than incentive-related. Many units begin production successfully but struggle to secure sustained markets beyond their district or state.''
Chhattisgarh has traditionally been associated with mining and heavy industries. What measurable indicators suggest the state is genuinely transitioning towards a more diversified MSME-led economy?
MSMEs now dominate enterprise activity. Of 6,736 units registered with the Industries Department over the last decade, 6,562 (67.8 per cent) are MSMEs, contributing 66.5 per cent of the 1.04 lakh jobs created. While 48 large units account for nearly 78 per cent of the Rs 58,662 crore investment, MSMEs now drive most enterprise and employment growth.
Annual certifications increased from 210 in 2016 to 1,447 in 2024, a nearly sevenfold growth. The sector mix is widening. Iron and steel growth has slowed, while clean energy and pharma's healthcare are expanding rapidly alongside food and agro-processing, which remains the largest contributor. Industrial activity now spans all 33 districts, including tribal regions. The Industrial Development Policy 2024–30 reinforces this transition through sector diversification and employment-linked incentives. The key signal is not the decline of mining, but the faster growth of non-mineral MSMEs, indicating a structural rather than incremental shift.
Many MSMEs struggle to scale beyond the micro-enterprise stage. Has the government identified why businesses plateau despite policy support, and what are the key structural challenges today?
Despite policy support, very few Chhattisgarh MSMEs successfully graduate beyond the micro stage, exposing a clear “missing middle” in the industrial base. Micro and small units together account for about 64 per cent of certified units, while Medium enterprises remain limited.
The constraints are increasingly structural rather than incentive-related. Many units begin production successfully but struggle to secure sustained markets beyond their district or state. A large share continues operating as commodity producers without differentiated products or stronger market positioning.
On the supply side, outdated machinery limits productivity, while professional systems for finance, marketing and compliance remain weak in many smaller enterprises. Skilled manpower also remains limited, with only about 41 per cent of the certified non-managerial workforce classified as skilled.
Financing presents another gap. Access to small enterprise loans exists, but scale-up finance between micro-enterprise lending and large industrial credit remains limited, making it easier for businesses to start than to expand. Logistics costs, compliance burdens and limited support infrastructure, such as testing labs, common facilities and packaging support, add further pressure.
The Industrial Development Policy 2024–30 is increasingly focused on this challenge through sector-specific incentives, employment-linked support, marginal-money assistance and enhanced packages for SC/ST entrepreneurs in backward blocks. However, the next phase of growth will depend less on subsidies and more on market access, technology adoption, skilled manpower and scale-up finance. Deepening the MSME middle, not just increasing the number of micro units, will be one of the defining tests of the current policy cycle.
Which sectors beyond coal, steel, and power are currently driving the highest MSME growth and employment generation in the state? Beyond coal, steel and power, Chhattisgarh’s MSME employment base is led by agro and food processing. Rice mills and food-processing units together account for about 43 per cent of certified units and roughly 30 per cent of total employment, making it the largest non-heavy industrial cluster in the state.
A second important segment is forest-produce-based industries, including tamarind, mahua, lac, herbal products and medicinal-plant processing, which are expanding particularly in tribal districts. Around 13.3 per cent of certified units are located in the Bastar-Surguja belt, indicating a deeper geographical spread of MSME activity beyond the traditional industrial corridor. Also, three sectors are emerging as high-growth areas from a smaller base: clean energy and solar, pharma and healthcare, and electrical and electronics manufacturing. Textiles and garments are also gaining importance as an employment-intensive sector, particularly for women.
To support these priorities and thrust sectors, the Industrial Development Policy 2024–30 provides targeted incentives. These include capital subsidies of 35 to 50 per cent of eligible investment and employment-linked support such as reimbursement of up to 20 per cent of wages for five years for eligible units, along with EPF support and time-bound disbursal structures that improve early-stage cash flows.
Access to formal credit and working capital remains a major challenge for MSMEs nationally. What are the key financing bottlenecks that MSMEs in Chhattisgarh continue to face despite existing schemes?
MSMEs in Chhattisgarh continue to face a set of practical constraints in accessing and effectively utilising finance, even as formal financial instruments and credit mechanisms are available through the banking system. These challenges are broadly rooted in three structural areas.
First, limited financial preparedness continues to be a key bottleneck. Many micro and first-generation entrepreneurs operate without robust financial records, formal project reports, or structured business planning, which are essential for accessing institutional credit.
Second, working capital stress remains persistent, largely driven by delayed payments from larger buyers and seasonal demand cycles. This creates recurring cash-flow pressures that affect operational stability, particularly for smaller enterprises with limited buffers.
Third, a large share of enterprises are still transitioning from informal to formal operations. This shift often brings difficulties in meeting documentation, compliance, and due diligence requirements expected by formal financial institutions.
Alongside these structural issues, low awareness of financial instruments further limits effective access. Many MSMEs, especially in smaller towns and rural areas, are not fully familiar with mechanisms such as credit guarantee schemes, invoice financing, and trade receivables discounting systems that can ease liquidity constraints.
At the same time, market uncertainty also influences financial behaviour. In several cases, entrepreneurs prioritise assured demand over borrowing, which leads to underutilisation of available credit even when it exists. Finally, capacity constraints in scaling operations remain a critical factor. Technology adoption, quality certification, skilled manpower, and managerial capability often determine growth outcomes as much as access to finance.
Delayed payments remain a critical issue for small businesses across India. What mechanisms are currently in place in Chhattisgarh to ensure timely payments to MSMEs, especially in government procurement?
Delayed payments remain one of the most significant liquidity challenges for MSMEs, particularly smaller enterprises operating with limited working capital buffers. In Chhattisgarh, the response has focused on strengthening institutional enforcement mechanisms alongside digital tracking systems, especially in the context of government procurement.
The state also actively uses the MSME Samadhaan portal, enabling enterprises to file and track grievances in a transparent and time-bound manner. Under the MSMED Act, payments to MSMEs are mandated within 45 days, with provisions for penal interest in case of delays. The state is also encouraging wider adoption of the Trade Receivables Discounting System (TReDS) to enable early liquidity through invoice discounting.
A key strengthening of the system came with the reconstitution of the MSEFC in December 2024, which has significantly improved enforcement intensity. Since then, the Council has been conducting weekly hearings and adjudicating around 100 cases per month. Of 807 registered cases, hearings have been completed in nearly 750 cases, with 101 cases resolved and approximately Rs 21 crore settled or recovered in favour of MSMEs through awards and settlements.
How effective have procurement policies and platforms such as GeM been in helping local MSMEs secure meaningful orders?
Procurement reforms and digital platforms such as GeM have significantly expanded market access for MSMEs in Chhattisgarh by reducing entry barriers that traditionally favoured larger suppliers. A major step was the amendment of the Chhattisgarh Store Purchase Rules in December 2025, aimed at improving accessibility for local enterprises. The reforms expanded procurement coverage across government departments, PSUs and local bodies, widening opportunities for MSMEs.
Several eligibility conditions have also been relaxed. Micro and small enterprises now receive exemptions from prior experience and turnover requirements, while EMD exemptions and concessions in security deposits have reduced financial barriers for SC/ST and women-led enterprises. The state has also promoted local sourcing through direct procurement from artisans and producer networks linked to handicrafts, handlooms and forest produce.
The scale of procurement activity indicates that these reforms are translating into actual business opportunities. In 2024–25, Chhattisgarh recorded procurement worth Rs 1,853 crore through GeM, while Chhattisgarh-based MSEs secured orders worth over Rs 5,200 crore across state, central and interstate procurement channels. The challenge ahead will be helping more MSMEs move from small-ticket participation to repeat and higher-value orders.
Several states have announced industrial clusters and plug-and-play infrastructure for MSMEs, but utilisation often remains uneven. What is the current occupancy and operational status of such infrastructure in Chhattisgarh?
A key indicator of industrial demand in Chhattisgarh is that a large share of its industrial infrastructure is already operational and occupied. The state currently has 76 industrial areas, of which 75 are fully operational, while the remaining four are partially operational and moving toward full functionality.
Occupancy levels also remain strong. As many as 48 industrial areas have already been fully allotted, reflecting sustained investor demand across sectors. This utilisation has been supported by reliable power supply, strong road and rail connectivity, assured water access and streamlined approval systems that reduce project setup timelines.
Alongside conventional industrial areas, the state is expanding plug-and-play infrastructure through sector-specific parks and ready-to-use facilities aimed at lowering entry barriers for MSMEs and reducing setup time. The next challenge is less about creating industrial land banks and more about strengthening supplier networks, common facilities and sector-specific support infrastructure to deepen cluster competitiveness.
Are MSMEs in the state facing workforce or skilled labour shortages, particularly in emerging sectors such as textiles, food processing, tourism, and IT-enabled services?
Workforce availability in Chhattisgarh is improving, but MSMEs in emerging sectors continue to face evolving skill gaps, particularly in technical capability, service orientation and workforce retention rather than absolute labour shortage. The state has developed a broad skilling ecosystem anchored by the Chhattisgarh State Skill Development Authority (CSSDA), supported by 366 vocational training providers delivering training across textiles, food processing, tourism and IT-enabled services.
This is further supported by 53 polytechnic institutes and more than 300 ITIs across the state, ensuring a steady pipeline of technically trained manpower. In addition, national institutions such as IIT, IIM, NIT and NIFT contribute to a growing higher-skilled talent base, with over 50,000 graduates annually entering the broader workforce ecosystem.
As states increasingly compete to attract MSME investment and manufacturing expansion, what differentiates Chhattisgarh’s approach from larger industrial states, and where does the government still see implementation gaps or challenges?
Chhattisgarh’s MSME strategy differs from larger industrial states in that it is being developed as a relatively new industrial ecosystem rather than an extension of an already mature manufacturing base. The approach is centred on leveraging raw-material proximity and sector-specific value addition to build downstream MSME opportunities closer to the source. In sectors such as food processing, aluminium, iron and steel, this reduces input and logistics costs while enabling deeper integration with existing supply chains.
At the same time, the state is actively diversifying beyond traditional mineral-led industries through thrust sectors such as textiles, food processing and services. This is supported by a competitive incentive framework that includes reimbursement of up to 20 per cent of employee wages for five years, capital subsidy of 35–50 per cent of eligible investment, and time-bound disbursement over one to five years, along with EPF support and sector-specific incentives. Parallel investments in infrastructure across textiles, pharmaceuticals, electronics, plastics and garments are also visible, with several clusters already showing strong occupancy. |
