The Engineering Export Promotion Council of India (EEPC India) has urged the government to introduce a separate credit rating framework for micro, small and medium enterprises (MSMEs), arguing that the existing rating mechanisms do not adequately reflect the unique business realities and growth potential of smaller firms.
According to EEPC India, a dedicated credit rating system would help MSMEs gain easier access to institutional finance, reduce borrowing costs, and improve their overall competitiveness in domestic and international markets. The council noted that many MSMEs, particularly export-oriented units, face challenges in securing affordable credit due to limited financial histories, smaller balance sheets, and traditional risk assessment models that often place them at a disadvantage.
The industry body emphasized that MSMEs play a critical role in India’s manufacturing and export ecosystem, contributing significantly to employment generation, industrial output, and foreign exchange earnings. However, access to timely and adequate financing remains one of the biggest hurdles for the sector’s growth.
EEPC India suggested that a customized rating framework should consider factors such as export performance, order books, operational efficiency, technology adoption, and repayment behavior rather than relying heavily on conventional financial metrics. Such an approach, it said, would provide lenders with a more accurate assessment of MSME creditworthiness.
The council also called for stronger collaboration among financial institutions, credit rating agencies, and government departments to design a transparent and reliable rating model tailored to the needs of small businesses. It added that an effective credit rating mechanism could help unlock greater investment, support capacity expansion, and enhance the global competitiveness of Indian MSMEs.
Industry stakeholders believe that a dedicated MSME credit rating framework would complement ongoing government initiatives aimed at strengthening the sector, boosting exports, and improving financial inclusion. As India seeks to expand its manufacturing base and increase exports, easier access to credit is expected to remain a key priority for MSME development.