Around 1 Lac MSMEs closed in India in Last 5 Years
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Since 01.07.2020, 6.62 crore enterprises have registered on Udyam / Udyam Assist Platform of Ministry of MSME. Out of this, 98,990 MSMEs have shut down in last 5 years. The year-wise details of enterprises shutdown is given below:
| Financial Year | 2020-21 | 2021-22 | 2022-23 | 2023-24 | 2024-25 | 2025-26(01.04.2025 to 28.07.2025) | Total |
| Enterprises Registered | 28,29,746 | 51,22,829 | 85,47,152 | 2,48,93,528 | 2,06,55,273 | 42,08,995 | 6,62,57,523 |
| Enterprises Shut Down | 175 | 6,222 | 13,290 | 19,828 | 39,446 | 20,029 | 98,990 |
Why are MSMEs failing?
There are various reasons for an enterprise to deregister such as change in the company owner, certificate not required, duplicate registration, shut down of enterprise and others. As per Udyam Portal, the number of MSMEs shut down as a proportion of the total those which have registered since the revision in the definition on 01.07.2020 is only 0.15%.
Benefits offered by Govt to MSMEs
To support businesses during the COVID-19 pandemic, especially the Micro, Small and Medium Enterprises (MSMEs), the Government of India introduced the Emergency Credit Line Guarantee Scheme (ECLGS). Under this scheme, a total credit guarantee of ₹5 lakh crore was made available to banks and lending institutions to extend collateral-free loans to eligible businesses. The primary goal was to help them meet operational liabilities and resume business activities. This scheme remained in operation until March 31, 2023.
According to a research report by the State Bank of India dated January 23, 2023, the ECLGS played a significant role in saving nearly 14.6 lakh MSME accounts, with 98.3% of them belonging to the Micro and Small Enterprises category. This highlights the scheme’s impact on preserving small-scale businesses during a time of financial stress.
In addition to this, non-tax benefits (such as preferences in government tenders, easier compliance norms, etc.) have been extended for 3 years for MSMEs even if they undergo an upward change in status (i.e., grow from micro to small or small to medium), allowing them a smoother transition without immediate regulatory burden.
Furthermore, to provide growth capital to MSMEs, the government launched the Self-Reliant India (SRI) Fund, with a planned equity infusion of ₹50,000 crore. This fund includes ₹10,000 crore from the central government and ₹40,000 crore from private equity and venture capital funds. The purpose of this initiative is to support MSMEs with potential by helping them scale up operations and attract private investment.
