The Economic Survey on Thursday flagged concerns over delayed payments to micro, small and medium enterprises (MSMEs) and called for innovative measures, including cash-flow-based lending, to improve credit access for the sector, which is expected to play a key role in India’s integration with global value chains.

Despite an expanding credit footprint and rising digital integration, access to formal finance remains a binding constraint for a large segment of the country’s 7.47 crore MSMEs, the Survey said, citing limited collateral availability and weak documentation readiness as major hurdles.

The issue is reflected in the World Bank’s assessment, which shows that 27 per cent of Indian MSMEs identify access to finance as their biggest obstacle. Women-owned MSMEs account for only a small share of commercial credit, though formalisation under the Udyam registration framework and targeted credit guidelines are gradually addressing the gap.

The Survey estimated that around ₹8.1 lakh crore is locked in delayed payments, squeezing working capital cycles and restricting growth across sectors.

It called for a significant expansion of cash-flow-based lending, under which loans are sanctioned on the basis of estimated or historical revenue streams, to encourage formal credit access for micro enterprises and first-time borrowers. Accelerating digital lending partnerships could also help channel timely and affordable finance.

The Survey underscored that MSMEs will be critical to the next phase of industrialisation, requiring a calibrated shift from an import-substitution-led model towards one focused on scale, competitiveness, innovation and deeper integration into global value chains.