How MSME trends indicate a shift in India’s capital market landscape, shows SIDBI–Jocata report

India’s micro, small and medium enterprises (MSMEs) are turning to capital markets to support growth, but the shift from private ownership to public scrutiny is being shaped less by ambition and more by execution, governance standards and data transparency.

Recent data shows that these factors are becoming central to how smaller firms scale and sustain investor confidence.

These observations emerged from the January edition of Sumpoorn MSME Conversations, held under the MSME Economic Activity Index – Sumpoorn, an initiative by Jocata, a BillDesk subsidiary, in collaboration with the Small Industries Development Bank of India (SIDBI).

The discussion featured Tirthankar Patnaik, Chief Economist at the National Stock Exchange of India (NSE), and Narasimhan Venkatesan, Principal Advisor at Jocata.

The numbers reflect the scale of change underway in the SME ecosystem.

On the NSE Emerge platform, capital mobilisation has increased from ₹44 crore raised by two companies in FY13 to over ₹7,000 crore raised by more than 160 firms in FY25.

Market capitalisation has grown to about ₹2.2 lakh crore, while more than 150 companies have moved from SME platforms to the main board. During the same period, NSE’s unique investor base expanded from 2.7 crore in FY19 to around 12.5 crore, signalling broader retail participation.

Regulatory discipline has played a key role in this transition. Experts said tighter norms, including requirements around positive cash flows and promoter lock-ins, have shifted SME participation away from short-term trading activity towards longer-term value creation.

While these measures have moderated the pace of new listings, they have contributed to stronger post-listing performance and improved investor confidence.

“Not every MSME is ready for listing,” Patnaik said. “The opportunity is large, but preparation is essential. Even at the upper end of the MSME spectrum, India has more than 35,000 medium-sized enterprises, which points to significant untapped potential.”

Liquidity, however, remains uneven across SME stocks.

Venkatesan said market capitalisation alone does not translate into investor trust. “What builds confidence is liquidity and active participation. As SME-linked products evolve and the market matures, secondary market depth should improve,” he said.

Policy support is also influencing adoption.

Several state governments now offer subsidies to offset listing-related expenses, and stock exchanges have expanded outreach efforts. Despite this, awareness gaps persist, with many eligible MSMEs still unclear about the operational, compliance and credibility benefits of accessing capital markets.

The discussion stressed that ambition must be supported by measurable performance, consistent disclosures and reliable data. These elements, the experts said, form the foundation for MSMEs seeking to move from SME platforms to the main board and operate effectively under public scrutiny.

The SIDBI–Jocata Sumpoorn initiative continues to provide data-driven insights into MSME economic activity. With household savings allocated to equities rising from about 3% in FY12 to 15.2% in FY25, experts said the runway for MSME participation in capital markets remains long, provided enterprises are structurally prepared for transparency and governance requirements.