The Engineering Exports Promotion body, EEPC India, has suggested to the government the implementation of a distinct rating system for micro, small, and medium enterprises (MSMEs). This proposed system aims to better represent the size and operational characteristics of these businesses. By having a separate rating mechanism, Indian MSMEs would receive appropriate acknowledgment, facilitating access to funds at favorable rates and enhancing their global market competitiveness.
According to EEPC India, many MSMEs face challenges in obtaining investment-grade or higher ratings from external rating agencies. This difficulty arises because these enterprises are typically compared to industry giants rather than their peers. Pankaj Chadha, Chairman of EEPC India, emphasized that due to sub-investment grade ratings, MSMEs encounter obstacles in securing loans from banks, requiring higher collateral compared to those with investment-grade ratings.
EEPC India highlighted an example from the steel sector where small MSME units are often measured against industry leaders like JSW or Tata Steel. To promote fair competition, it is recommended that the Reserve Bank of India (RBI) establish a distinct rating system exclusively for MSMEs. This system would ensure that MSME units are evaluated against their peers within the same category, taking into account their specific size and operational characteristics.
The MSME sector plays a crucial role in the Indian economy, contributing significantly to manufacturing output and merchandise exports. Despite global uncertainties, Indian MSMEs have demonstrated resilience, with credit exposure reaching approximately Rs 46 lakh crore in April 2026, as reported by credit bureau CRIF High Mark. The sector’s resilience is attributed to robust domestic demand, supportive policies, and diversified credit participation, leading to a 12.8% year-on-year increase in overall credit exposure.
