India's micro, small and medium enterprises (MSMEs) have remained resilient in the face of global geopolitical headwinds, with total credit exposure in the sector climbing to approximately ₹46 lakh crore in April 2026, according to a report released on Tuesday, 2 June 2026 by credit bureau CRIF High Mark. The 12.8 per cent year-on-year rise in overall credit exposure reflects sustained domestic demand and active policy support, even as early stress signals emerge in select segments.

Key Developments

The CRIF High Mark report attributes the sector's resilience to three pillars: strong domestic demand, government policy backing, and diversified credit participation across geographies and sectors. Asset-quality improvements have also supported the headline growth figure.

However, the data points to a clear moderation in momentum. Between December 2025 and April 2026, point-of-sale (POS) growth slowed sharply to 3.1 per cent, compared with 9.7 per cent in the corresponding prior-year period. Active loan counts declined by 3.5 per cent over the same window.

Sectors Showing Early Stress

Manufacturing and trade — together accounting for more than 60 per cent of POS share — were the first to register strain. Manufacturing credit growth moderated to 4.3 per cent from 10.4 per cent a year earlier. Sectors including shipping and transport, food processing, and auto and ancillaries recorded moderate POS declines amid the global uncertainty.

Early-stage delinquencies in manufacturing edged up from 1.6 per cent to 1.8 per cent between March and April 2026. The report cautioned, however, that these movements may partly reflect cyclical factors and warrant continued monitoring before drawing firm conclusions.

Lender Behaviour and Working Capital Pressure

Across public sector banks (PSU banks), private banks, and non-banking financial companies (NBFCs), lenders have adopted a more cautious stance, with credit growth slowing in each category. The report identified rising delinquency levels in the micro segment, PSU bank portfolios, and cash credit facilities as early warning indicators deserving attention.

Working capital utilisation has remained elevated, suggesting businesses are leaning more heavily on existing credit lines to navigate operational and supply-chain pressures — a pattern consistent with tighter external financing conditions.

Systemic Risk Contained, For Now

Crucially, the report characterised the current stress as selective rather than systemic. Portfolio quality across the broader MSME ecosystem remains largely stable, with strain concentrated in specific sectors and borrower segments. This distinction matters: it suggests the disruption is traceable to identifiable global triggers rather than an underlying deterioration in MSME fundamentals.

With global trade tensions showing no immediate sign of easing, how quickly manufacturing and trade segments stabilise will be a key indicator of the sector's trajectory in the second half of FY2027.