MSME Competitiveness & Regulatory Burdens: CAG Report

New Delhi, Jan 29 (PTI) Excessive regulatory burdens impede the competitiveness of enterprises, CAG K Sanjay Murthy said on Thursday, as he emphasised that MSME-related reforms need to cut across multiple departments and levels of government.

The MSME sector, he said, is not only critical for economic growth, but also for inclusive development, supporting entrepreneurship, strengthening supply chains, and creating livelihoods across rural and urban India.

He was addressing an 'Audit Conclave' on Pan-India Horizontal Audit on Ease of Doing Business (EoDB) for Micro, Small and Medium Enterprises (MSMEs) organised by the Office of the Comptroller and Auditor General of India (CAG).

"Excessive regulatory burdens impede the competitiveness of enterprises and slow down industrial growth. MSME-related reforms need to cut across multiple departments and levels of government-Centre, State, and local bodies," Murthy said.

The effectiveness of reforms depends not only on policy intent, but on the coordination among departments, digital system integration, uniformity in implementation, and citizen and business feedback loops, he added.

"We need 4-pronged strategy of Simplification, Digitalisation, Decriminalisation, and Elimination of redundant laws-all of which are highly relevant for MSMEs," the CAG said.

He also said that Ease of Doing Business (EoDB) and Ease of Living are priority audit themes for CAG, cutting across departments, geographies (Centre, States, local bodies), and sectors.


Murthy emphasised that focus should be on data-driven audits and decision-making, as credible data inputs are essential for effective policy formulation. Government initiatives show significant progress, and auditors are guided to focus on areas backed by strong data trends rather than routine compliance audits alone.

CAG also highlighted the need for sharing innovative best practices across States to improve efficiency and standardization of similar schemes.

He reiterated its commitment to supporting governance reforms through evidence-based audit insights and collaboration with States, ministries, industry, and entrepreneurs.

S C L Das, Secretary of Ministry of MSME highlighted the recent positive collaborative progress by Government and Industry to reduce the compliance burden and vulnerabilities faced by small enterprises. He further mentioned that sustained reforms in legislation, policy, deregulation, and supply-side support are essential to strengthen MSMEs and achieve national development goals.

Saurabh Garg, Secretary of MoSPI emphasised the importance of data harmonisation, machine-readable digital systems, and compliance reductions to enable effective decision-making and targeted MSME support.

The CAG Office said that the Pan-India Horizontal Audit on EoDB for MSMEs represents an important step towards outcome-oriented public sector auditing, aligned with national priorities and focused on improving service delivery for MSMEs.

The Pan-India exercise will cover the period from 2021–22 to 2025–26, with field audit planned under the Annual Audit Plan 2026–27.

Industry bodies, including CII, FICCI, ASSOCHAM, PHDCCI and FISME, and subject-matter experts also participated in the conclave.