Enterprise · Sub-pillar 5.2
Access to capital
Credit for small and medium businesses, and funding for founders, including those outside the major metros.
What is access to capital?
Access to capital is sub-pillar 5.2 of the 47 BH framework for a developed Bharat by 2047, the second of five sub-pillars under the Enterprise pillar. It asks whether small and medium businesses can get credit on fair terms, and whether founders can raise funding wherever they are, not only in the major metros.
Why it matters for 2047
Ideas are evenly distributed; money is not. A good business in a small town that cannot borrow stays small, and a founder outside the three big startup cities raises less for the same idea. The gap between what India's small firms need and what the formal system lends them is measured in tens of lakh crore rupees.
Small and medium enterprises employ the second-largest share of Indians after agriculture and produce close to a third of the economy. Whether they can get working capital at a reasonable rate decides whether they grow, hire and formalise, or stay in the informal cash economy that moneylenders serve.
For startups, India has built one of the world's largest venture ecosystems in a decade. The test now is depth and reach: whether funding survives downturns, reaches first-time and women founders, and flows beyond Bengaluru, Delhi and Mumbai.
Where India stands
- Rs 30 lakh crore
is the estimated gap between the credit India's micro, small and medium enterprises need (about Rs 64 lakh crore) and what the formal system supplies (about Rs 34 lakh crore), an estimate by Crisil cited in SIDBI's 2025 review of the sector.[1]
- 7.34 crore
unincorporated MSMEs were counted in 2023-24, contributing about 30% of GDP and 45.7% of merchandise exports and employing about 26 crore people; 6.2 crore had registered on the Udyam portal by March 2025, and women own 26.2% of proprietary enterprises.[1]
- 2,12,283
startups were recognised by the Department for Promotion of Industry and Internal Trade as of 31 January 2026, of which 1,02,054 had at least one woman director; the Fund of Funds had backed 1,382 startups with Rs 25,859 crore and the Seed Fund Scheme 3,311 startups with Rs 592 crore.[2]
- 4th
in the world is India's rank on late-stage venture capital deals as a share of the global total in the Global Innovation Index 2025, and 9th on finance for startups and scaleups; it ranks 48th on microfinance loans as a share of GDP.[4]
The top of the pyramid is well served. India ranks among the world's top ten for venture funding, has produced more than 120 unicorns from four in 2014, and about half of its recognised startups now come from Tier II and Tier III cities. [3][4] Formal credit has spread: a SIDBI survey found three in four MSMEs had a formal loan, including 68% of micro enterprises. [1]
The middle is where the gap lies. Formal lenders meet barely half of estimated MSME credit demand, leaving a hole of about Rs 30 lakh crore that informal lenders fill at much higher cost. [1] Startup funding is concentrated in a few cities and a few sectors, and government seed funds, while large in rupee terms, have reached a few thousand of the two lakh recognised startups. [2]
A note on the numbers: the credit gap is an estimate, not a count, and depends on assumptions about how much credit a firm 'should' have; the MSME count comes from a statistical survey of unincorporated enterprises and excludes companies; startup figures count those registered with the government, not all new firms; the Global Innovation Index ranks are relative to other countries and can move when others change.
On the 47 BH report card
Every 15 August, 47 BH reports how far India has come on each sub-pillar. For this sub-pillar, the headline indicators are:
- Estimated MSME credit gap and share of MSMEs with formal credit (SIDBI, RBI).
- Udyam-registered enterprises and bank credit to MSMEs (Ministry of MSME, RBI).
- Recognised startups and government fund disbursals, by state and city (DPIIT).
- Finance for startups and scaleups, and late-stage venture capital ranks (Global Innovation Index, WIPO).
Two lenses on access to capital
City and village
47 BH asks whether a manufacturer in Coimbatore, a trader in Guwahati and a founder in Indore can raise money on the strength of their business rather than their address. Half of recognised startups are now outside the metros, but the share of funding that follows them is the number to watch.
Learn, avoid, protect
- Learn
- What can India learn from countries that lend to small firms against cash flows and invoices rather than property, that built regional venture funds, and that made credit histories portable so a good borrower is recognised anywhere?
- Avoid
- Which mistakes should it avoid, such as pushing credit by target and inviting bad loans, letting app-based lenders charge the poor what moneylenders did, or measuring success by unicorns while small firms cannot get working capital?
- Protect
- What of its own should it protect, such as the account aggregator and digital payment systems that let lenders see a small firm's real cash flows, the self-help group and cooperative credit networks that reach the smallest borrowers, and the Udyam registry that gives informal firms a formal identity?
What this sub-pillar does not cover
Each topic has one home in the framework. These related topics sit elsewhere:
- The rules for starting, running and closing a business: Enterprise: Open and fair markets
- Whether research becomes companies and products: Enterprise: Innovation and technology
- Attitudes to risk and building from small towns: Enterprise: Entrepreneurial culture
- Household savings, insurance and debt: Economy: Financial security
- Farm credit and agricultural finance: Economy: Agriculture and food
Questions about access to capital
How big is India's MSME credit gap?
About Rs 30 lakh crore: estimated demand of about Rs 64 lakh crore against formal supply of about Rs 34 lakh crore, a Crisil estimate cited in SIDBI's May 2025 report on the sector. [1]
How many MSMEs does India have?
7.34 crore unincorporated enterprises in 2023-24, employing about 26 crore people and contributing about 30% of GDP and 45.7% of merchandise exports; 6.2 crore had registered on Udyam by March 2025, according to SIDBI. [1]
How many startups does India have?
2,12,283 recognised by DPIIT as of 31 January 2026, of which 1,02,054 had a woman director. About half come from Tier II and Tier III cities, and India has more than 120 unicorns. [2][3]
How much has the government invested in startups?
The Fund of Funds for Startups had committed Rs 25,859 crore to 1,382 startups and the Startup India Seed Fund Scheme Rs 592 crore to 3,311 startups by early 2026, according to the Press Information Bureau. [2]
Why is access to capital a development question?
Because an economy grows by letting good ideas find money. When credit depends on collateral and funding on postcode, the country wastes the talent of everyone who has neither, and that waste is largest in the small towns where most Indians live.
Sources
- Small Industries Development Bank of India, "Understanding Indian MSME Sector: Progress and Challenges", May 2025. https://www.sidbi.in/uploads/Understanding_Indian_MSME_sector_Progress_and_Challenges_13_05_25_Final.pdf
- Press Information Bureau, Ministry of Commerce and Industry, release on Startup India (recognised startups, Fund of Funds and Seed Fund Scheme), 17 March 2026. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2241313®=3&lang=1
- Press Information Bureau, "A Decade of Startup India" backgrounder, 15 January 2026. https://static.pib.gov.in/WriteReadData/specificdocs/documents/2026/jan/doc2026115757801.pdf
- World Intellectual Property Organization, "Global Innovation Index 2025: India" economy profile, September 2025. https://www.wipo.int/edocs/gii-ranking/2025/in.pdf
47 BH cites every figure so that it can be checked. If you find an error, it will be corrected openly and the date below will change.