MSME Capital Market Participation Surges as NSE Emerge Platform Mobilises Over ₹7,000 Crore in FY25

India's micro, small and medium enterprises are experiencing a significant transformation as they increasingly embrace capital markets for growth funding. This shift is being driven by enhanced execution capabilities, improved governance standards and greater data transparency, according to insights from the latest MSME Economic Activity Index report.

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

Remarkable Growth in Capital Mobilisation

The NSE Emerge platform has demonstrated exceptional growth trajectory over the past decade. The platform's performance metrics highlight the scale of transformation occurring within the SME ecosystem.

Simultaneously, NSE's unique investor base has expanded dramatically from 2.7 crore in FY19 to around 12.5 crore, indicating substantial growth in retail participation and broader market accessibility.

Regulatory Framework Strengthens Market Foundation

Regulatory discipline has emerged as a crucial factor in this transition. Tighter norms, including requirements around positive cash flows and promoter lock-ins, have fundamentally shifted SME participation patterns. These measures have moved the focus away from short-term trading activities towards longer-term value creation strategies.

While these enhanced regulatory requirements have moderated the pace of new listings, they have simultaneously contributed to stronger post-listing performance and improved investor confidence. The emphasis on governance and compliance has created a more sustainable foundation for MSME growth in public markets.

Market Readiness and Liquidity Challenges

"Not every MSME is ready for listing," Patnaik observed. "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."

Despite the growth in market capitalisation, liquidity remains uneven across SME stocks. Venkatesan emphasised that 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 explained.

Policy Support and Market Evolution

Several supportive measures are facilitating greater MSME participation in capital markets:

• State governments now offer subsidies to offset listing-related expenses
• Stock exchanges have expanded their outreach efforts
• Enhanced awareness programmes target eligible MSMEs
• Focus on operational, compliance and credibility benefits

However, awareness gaps persist, with many eligible MSMEs remaining unclear about the comprehensive benefits of accessing capital markets.

Future Outlook and Market Potential

The structural changes in household savings allocation present significant opportunities for continued growth. Household savings allocated to equities have risen from approximately 3.00% in FY12 to 15.20% in FY25, indicating a fundamental shift in investment preferences.

Experts emphasise that successful transition from SME platforms to main board operations requires measurable performance, consistent disclosures and reliable data. These elements form the foundation for MSMEs seeking to operate effectively under public market scrutiny.

The SIDBI–Jocata Sumpoorn initiative continues providing data-driven insights into MSME economic activity. With the substantial increase in equity allocation and growing investor base, the runway for MSME participation in capital markets remains extensive, provided enterprises maintain structural preparedness for transparency and governance requirements.