The Union ministry of micro, small, and medium enterprises (MSME) plans to triple the volume of raw materials it assists MSMEs in procuring through state-run National Small Industries Corp. (NSIC) to about 900,000 tonnes a year by fiscal year 2030 (FY30), from around 300,000 tonnes currently, as businesses grapple with supply disruptions and procurement constraints, according to two government officials who spoke on condition of anonymity.
NSIC runs the Raw Material Assistance and Raw Material Distribution schemes for MSMEs, under which it aggregates demand for various raw materials and procures them at lower rates. The schemes cover products ranging from metals and coal to construction materials.
The bulk procurement can lower commodity prices by 3-5%, while also helping MSMEs save on supply-chain costs, according to MSME industry estimates.
“We have the NSIC which aggregates demand for various commodities and gets lower prices. That is expected to increase, NSIC is targeting around 9 lakh tonnes (900,000) of commodities per year by FY30, from the current three lakh (300,000) tonnes volume,” one of the officials said.
NSIC distributed 364,374 tonnes of raw material worth ₹3,089 crore in 2025 under the Raw Material Distribution scheme, according to the MSME ministry’s FY26 annual report. The state-run corporation also provided credit worth ₹7,841 crore to 2,440 businesses between January and November 2025 for raw material procurement under the schemes, according to MSME ministry data.
Queries emailed to the MSME ministry and NSIC on 27 August remained unanswered until press time.
Procurement pressure
The push to expand the scheme comes as MSMEs face growing procurement challenges. A survey of 27,045 MSMEs by industry lobby group India SME Forum in early August found that 55% of respondents faced issues related to price volatility or a lack of transparency in procurement prices.
The report, titled India MSME Digital Procurement Report 2026, also found that 68.7% of surveyed MSMEs wanted to procure raw materials digitally, while 55.7% identified price volatility as a major procurement challenge.
“Disruptions arising from the West Asia conflict and the shipping crisis have further intensified uncertainty around material availability, delivery schedules, input prices and freight costs and it is in this regard that digital procurement assistance through government-backed institutions and platforms, particularly the National Small Industries Corporation, can become a powerful enabler,” said Vinod Kumar, president of India SME Forum, which represents the interests of around 100,000 MSMEs.
“Support in aggregating demand, providing access to verified suppliers, improving price transparency and connecting procurement with affordable credit and reliable logistics could enable even the smallest enterprise with the collective purchasing strength and supply-chain resilience they need to compete and grow,” Kumar added.
India has about 92 million MSMEs, according to government data. Service-sector businesses account for 38%, manufacturing MSMEs for 20% and trading MSMEs for the remaining 42%. These registered MSMEs contribute about 30.1% of India’s GDP, 35.4% of manufacturing output and 48% of the country’s trade.
Wider coverage
The government has seen a significant rise in demand for raw material assistance during the West Asia conflict and plans to widen the range of raw materials covered under the schemes, according to the second government official cited above.
“We noticed a significant rise in the demand for these raw materials during the months when the West Asia conflict was at its peak, compared to the same months last year. And we would like to cover more regions and more sectors, for which we are collecting data from our field offices,” said the second senior government official.
Experts said more businesses could benefit from the schemes, given the size of India’s MSME base.
“It is likely that most Indian MSMEs require the benefits of lower procurement costs, because these businesses operate with significant limitations on capital. MSMEs individually may not have negotiating powers to get better prices, a gap which can be readily filled by the government,” said Veeramani C., professor and director, Centre for Development Studies, a Thiruvananthapuram-based economic policy think tank.