Over 75,000 MSMEs Shut Down Since COVID, Government Plans Credit Support

New Delhi: The number of MSMEs shutting down since the onset of COVID-19 has crossed 75,000, highlighting the sector’s ongoing struggles despite various government support measures. As per the latest data shared by Shobha Karandlaje, Minister of State for MSME, in the Rajya Sabha, the count of closures has surged significantly in the last few years.

In the current financial year alone, 35,567 MSMEs have closed as of February 28, 2025, marking a sharp rise from 19,828 closures in FY24, 13,290 in FY23, 6,222 in FY22, and just 175 in FY21 when the government launched the Udyam Registration Portal. Overall, as of March 17, 2025, 75,082 MSMEs registered on the portal have shut down.

Despite the high number, the total count of closed units remains only 0.12% of the 6.1 crore MSMEs registered on the Udyam portal. Maharashtra saw the highest number of closures with 8,472 MSMEs shutting down, followed by Tamil Nadu (4,412), Gujarat (3,148), Rajasthan (2,989), and Karnataka (2,010).

Government’s Credit Support Initiative

To counter financial challenges faced by MSMEs, the government is working on a ₹1-1.5 lakh crore credit guarantee cover for MSMEs in 2025-26 under the new Mutual Credit Guarantee Scheme. This scheme will provide a 60% credit guarantee cover through the National Credit Guarantee Trustee Company Limited (NCGTC) for loans up to ₹100 crore sanctioned to eligible MSMEs for purchasing equipment or machinery.

Strengthening MSMEs for Long-Term Growth

While the government continues to focus on financial support, industry leaders are emphasizing the need for MSMEs to be integrated into larger supply chains to boost competitiveness. NITI Aayog’s Vice Chairman Suman Bery recently highlighted that achieving 7-8% GDP growth will require MSMEs to actively participate in major supply networks to drive real economic progress.

The Way Forward

With MSMEs being the backbone of India’s economy, these closures underscore the need for sustained policy reforms, improved financial access, and digital transformation. While credit support measures provide relief, ensuring a stable business environment with reduced operational challenges remains a priority for policymakers.

Disclaimer: This summary is for informational purposes and readers should verify specific details through official reports or consult industry professionals for comprehensive insights.