Despite playing a pivotal role in the workforce, women-owned MSMEs remain the exception rather than the norm. The data is clear: participation does not translate to power.
The Micro, Small, and Medium Enterprises (MSME) sector in India is one of the few spaces in the Indian economy where women’s participation is notably higher than in many other industries. Since the launch of the Udyam registration portal in July 2020, over 6.29 crore MSMEs have registered, and more than 27 crore jobs have been reported. Of these, about 6.25 crore jobs or roughly 26%, are held by women. Despite growing participation by women in the MSME industry, they remain underrepresented in both leadership roles and enterprise ownership.
Limited leadership and low ownership
Women make up only 10% of executive teams in MSMEs. Even though over half of India’s artisan workforce comprises women, they own only 22% of MSMEs. As the size of the enterprise increases, their representation continues to drop, from 22% in micro units to 12% in small enterprises and just 7% in medium ones.
According to the Economic Survey 2024–25, more than 80% of workers in the khadi sector and over 50% in sericulture are women. In the handicrafts sector, the figure is 56.1%, while the handloom industry employs 72% women. Despite these numbers, men continue to dominate MSME entrepreneurship.
Women-owned MSMEs: Stuck at micro, struggling to scale
Over 90% of all MSMEs in India are micro-enterprises. Most women-owned businesses fall under this category and often operate as single-person units. In 2022, only 17% of women-owned enterprises employed additional workers, and 95% of them had fewer than six workers.
Interestingly, women-owned MSMEs are more common in rural areas than urban centres. Rural areas had around 22% of women-owned MSMEs, compared to 18% in metropolitan regions. However, women owned just 5% of small and 2.6% of medium enterprises, showing a sharp drop as businesses scale. The distribution of women employees in MSMEs is also higher in the rural sector (13.75 million) compared to the urban sector (12.74 million).
Access to credit: The most significant barrier
The MSME sector faces a ₹30 lakh crore credit gap, where women-led enterprises experience an even larger gap of 35%. While 76% of women-led MSMEs have some access to credit, they face greater hurdles than their male counterparts. Around 41% of women entrepreneurs cited credit access and stiff market competition as their biggest obstacles.
Funding inequality: The credit chasm
When it comes to borrowing, 76% of women-led MSMEs accessed credit compared to 84% of male-led businesses. On average, 8% of MSMEs across India turn to informal borrowing. A larger share of women also turn to informal borrowing and other informal credit sources, particularly in sectors and regions where formal credit systems haven’t fully reached. In some industries, 30–40% of MSMEs still depend on informal loans, pointing to the urgent need for financial literacy and better banking outreach.
In several parts of India, predominantly rural and semi-urban areas, banks and formal lending institutions either don’t have enough reach or impose complicated processes that discourage small, women-led businesses. Without access to bank loans, many women running MSMEs are forced to borrow from informal sources like local moneylenders, relatives, or chit funds. This situation holds women back from scaling their businesses. It limits their ability to invest in better infrastructure, technology, or staff, and it leaves them vulnerable to exploitative lending.
What else is holding back women-owned MSMEs in India?
Beyond finance, the operational challenges are equally pressing. Women entrepreneurs report facing issues ranging from a lack of access to technology and skilled workers to difficulty upgrading their businesses to stay competitive. As many of these businesses are home-run and informal, they often operate without the resources needed for long-term growth.
Market visibility remains low, and mobility issues, coupled with unpaid care responsibilities, add to the burden. Many also lack the digital skills necessary to access government schemes or use online platforms to grow their ventures. The gaps in digital literacy are particularly high in regions with lower education levels and poorer internet access.
India ranks 57th out of 65 countries in the Mastercard Index on Women Entrepreneurship (MIWE) and 70th among 77 nations in the Female Entrepreneurship Index. These rankings highlight structural challenges and a lack of supportive environments for women-led businesses.
The government has launched schemes like Drone Didi and Ladli Behen Yojana to support women’s employment. While these initiatives are a step in the right direction, they haven’t done enough to support women in becoming business owners. Most of these schemes focus on job creation, not enterprise development. What women need now is targeted support that helps them grow, scale, and formalise their businesses.
Beyond numbers: The real story of women-owned MSMEs in India
The MSME sector is full of potential. It is one of the few areas where women have made visible progress in workforce participation. However, offering employment opportunities to women is not the same as enabling them to become business leaders or owners. Job creation focuses on giving women roles as workers or employees. It helps with income generation and economic participation, but it often keeps them at the bottom of the ladder, with little say in decision-making or business strategy.
So, while job creation is important, true empowerment happens when women move from being workers to being leaders and entrepreneurs. Women are already key contributors in sectors like khadi, handloom, and handicrafts. With the right support, they can play a much larger role in the economy, not just as workers but also as owners and leaders.
At Changeincontent, we believe representation without ownership is not empowerment—it is containment. The real conversation lies in fixing that.
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Disclaimer: The views expressed in this article are based on the writer’s insights, supported by data and resources available both online and offline, as applicable. Changeincontent.com is committed to promoting inclusivity across all forms of content. We broadly define inclusivity as media, policies, law, and history, encompassing all elements that influence the lives of women and marginalised individuals. Our goal is to promote understanding and advocate for comprehensive inclusivity.
