Lending to the MSME sector in Kerala is on track to surpass approximately US $ 12 billion (Rs. 1 lakh crore) by the end of the current fiscal year, reflecting a substantial increase in credit accessibility. Data released indicates that total loans outstanding to the MSME sector in the state reached approximately US $ 1.11 billion (Rs. 92,175.63 crore) as of December 31, 2024, marking a 38 per cent growth from approximately US $ 805 million (Rs. 66,876 crore) on 31st December 2022. This surge contrasts sharply with the minimal 1.22 per cent growth observed between December 2020 and 2021.
The State Government’s initiative, the ‘Year of Enterprises’ launched in 2022-23, aimed at fostering entrepreneurship, is credited with contributing to this growth. However, a significant portion of the new MSME units established are concentrated in the retail and services sectors, with manufacturing constituting a smaller percentage. Specifically, out of the 10.7 lakh MSME accounts in Kerala at the end of 2024, 2.64 lakh are in manufacturing, while nearly 5 lakh are in services and 3.12 lakh in retail trade.
Despite the robust growth in lending within Kerala, the state’s MSME loan exposure remains relatively small compared to national figures. In the 2023-24 fiscal year, MSME loans totaling approximately US $ 653 billion (Rs. 54.2 lakh crore) were sanctioned across India, representing a 19.3 per cent increase from the previous year.
Concerns have been raised regarding the nature of the newly established MSMEs in Kerala. Observations suggest that many are sole proprietorships, which may not contribute significantly to economic linkages or job creation. Additionally, small traders and retailers have expressed concerns about the impact of large supermarkets and e-commerce platforms on their businesses, citing price competition and concessions obtained by larger entities. These traders have called for government intervention, such as a cess on e-commerce giants, to ensure a level playing field.
