• India’s youth population comprises 27% of the total population, and is a key growth driver for the MSME sector.
• Young business owners are modernizing traditional businesses and creating new ones.
• The Youth are also responsible for bringing in Technology adoption in their workplaces, and when this happens for MSMEs, it has been known to improve efficiency and expand into newer markets.
• Furthermore, the youth is also taking the lead on strengthening financial literacy in their workplaces and identifying various ways in which businesses can be scaled by seeking business loans from RBI-registered NBFCs or financial institutions..

India is home to one of the world’s largest youth populations, with 27% of its citizens below the age of 35 and nearly 37.1 crore Indians falling within the 15–29 age group. This demographic strength offers a powerful advantage for the country’s economic landscape, as youth now make up a significant portion of the national workforce —  especially within the MSME sector, where young entrepreneurs are setting up businesses, generating jobs, embedding sustainability and innovation into their growth stories. 

Against this backdrop, International Youth Day 2025 takes on deeper relevance. Observed every year on August 12, this year’s theme, “Youth for a Sustainable Future: Shaping the Nation with Resilience and Responsibility”,  recognizes the vital role young people play in building inclusive, future-ready economies.

This article explores how young entrepreneurs are strengthening the MSME ecosystem and what support they need to build a resilient and sustainable future.

Youth as Business Owners in MSMEs

The youth of India is turning increasingly aspirational, as a high 44% of young adults, especially in rural areas, are keen to start their own business. Nearly 9 out of 10 rural of these are first-generation businesses. This points to a growing culture of entrepreneurship and self-reliance among the younger generation.

The structure of the MSME sector supports this trend. A staggering 81% of these enterprises operate as proprietorships, and about 80% are in the micro category. This dominance of small, owner-led units creates a strong base for young people to enter and grow as entrepreneurs. 

These young business owners are reshaping the MSME landscape through innovation, digital adoption, and fresh market approaches. They are modernizing production, introducing sustainable practices, and finding new ways to connect with customers — both locally and globally. Along with helping traditional industries remain competitive, this trend is also opening up new possibilities in sectors and product lines. A combination of modern skills and a deep understanding of community needs is enabling youth-led MSMEs to generate employment, strengthen local economies, and expand India’s presence in emerging markets.

Youth-led Business Ownership and MSME Growth

Besides launching new businesses, youth are also modernizing family-run enterprises. This trend is especially visible in agritech and textiles. Many second-generation MSME owners are introducing improvements in product design, automation, customer outreach, and marketing, thanks to their greater comfort with technology. This generational shift has also led to increased willingness to explore funding options, participate in formal lending frameworks, and scale businesses.

An example of this shift can be seen in Sarvanan Power Looms from Elampillai, a small town in Salem, Tamil Nadu. Raja Govindhan began his textile business, Sarvanan Power Looms, in 2001 with just two handlooms and a modest investment of ₹50,000. In 2011, his son, Sarvanan Govindhan, joined the business, bringing with him both weaving expertise, upgradation, and a vision for expansion. With his parents’ support and a timely Loan Against Property and a top-up loan from Protium, Sarvanan transformed the modest unit into a full-fledged enterprise, increasing the production capacity by 700% in 2023–24 through its 38 power looms.

The potential mentioned above and the role of young entrepreneurs in strengthening India’s MSME sector have not gone unnoticed by policymakers. The government has developed a range of programs to support young small enterprise owners at every stage of their business journey. Beyond funding, these efforts focus on building skills, strengthening digital adoption, and creating platforms for new business ideas to develop.

Here are the efforts by the government:

1. Skilling and AI-based Training Programs

The government has partnered with private and large corporates to launch upskilling initiatives that prepare youth for entrepreneurship. Programs like the Skill India Digital Platform, the National AI Mission, and Startup India’s learning modules offer programs in digital literacy, financial management, export documentation, and even AI usage in small businesses.

Some programs also include vernacular content, making them accessible to young entrepreneurs in non-metro regions. 

2. Financial Incentives and Support Schemes

The Ministry of MSME runs several schemes specifically designed to support young business owners. For example:

• Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) offers collateral-free loans through banks and NBFCs.
• Prime Minister’s Employment Generation Programme (PMEGP) provides margin money subsidies for those starting manufacturing or service enterprises.
• Support for Entrepreneurial and Managerial Development of MSMEs (through Incubators) promotes new ideas through mentoring and funding.

These schemes combine funding, mentorship, and market access — helping youth-led MSMEs build sustainable, competitive operations.

3. Promoting Real-World Business Readiness

Through Entrepreneurship Development Programs (EDPs), incubation hubs, and district-level mentorship drives, the government is helping young entrepreneurs move from idea to execution. These platforms offer early-stage guidance on legal compliance, marketing strategies, and business planning — areas where many first-time founders often struggle.

State governments and institutions like the National Small Industries Corporation (NSIC) are also organizing cluster-based trade fairs and buyer-seller meets, giving young MSME owners a chance to network and showcase their offerings.

Opportunities and Challenges for Young Business Owners

Youth-led MSMEs are operating in a fast-changing environment where new prospects often come with equal measures of uncertainty. To succeed, young business owners need clear strategies, sound financial management, and the flexibility to respond to market shifts. Long-term success depends on building strong processes, reinforcing supply chains, and preparing for periods of volatility.

Businesses that diversify their products or maintain emergency reserves are often better equipped to handle disruptions such as raw material shortages or sudden demand changes. Focusing on sustained growth instead of quick returns is important for building resilience.

Access to formal finance remains one of the most significant barriers for many young entrepreneurs. Limited credit histories and the absence of collateral often restrict their borrowing options. However, recent policy changes have been introduced to help address these gaps.

The credit guarantee cover for micro and small enterprises has been increased from ₹5 crore to ₹10 crore, unlocking the potential for an additional ₹1.5 lakh crore in credit over the next five years. For new businesses, the guarantee cover has also been doubled from ₹10 crore to ₹20 crore, with the fee reduced to 1% for loans in 27 priority sectors. In addition, a new ₹10,000 crore Fund of Funds is being set up to expand support for first-time business ventures.

Besides these policies, the emergence of RBI-registered NBFCs such as Protium has wide financing options. Products like machinery loans and top-up loans are given to deserving young business owners to expand their operations.

Financial literacy also remains important. Many business owners in Tier-3 cities are still unfamiliar with how to interpret loan terms, calculate EMIs, or prepare the necessary documents for funding. This makes continued investment in financial education essential. Programs — both government-led and private — should focus on delivering this knowledge in regional languages and through trusted local channels such as Common Service Centers (CSCs).

There is also a need to bridge the gap between what young business owners learn and what the market demands. Stronger collaboration between industry bodies, educational institutions, and incubation centers can help. For example, industry professionals can mentor college-led enterprises or MSMEs taking on apprentices from local Industrial Training Institutes (ITIs). Such partnerships promote the exchange of practical skills and foster innovation grounded in real-world problem-solving.

Empowering India’s Youth to Lead the MSME Movement

India’s youth are not just the beneficiaries of progress but also its architects. Recent data shows strong momentum in core economic sectors of manufacturing, construction, and services:

To sustain and amplify this growth further, more young individuals need to enter these dynamic sectors. Their energy, innovation, and adaptability can provide the extra push needed to drive productivity, generate jobs, and expand export capabilities. 

With the right support system, youth-led MSMEs can become the backbone of a future-ready and resilient economy.

The journey ahead calls for making business ownership a more accessible choice for young individuals. It will require enhancing credit access through simplified loan products and reliable financial partners such as Protium, ensuring that business owners can secure the funding they need to grow. Expanding skilling and mentoring programs in local languages and practical formats will be equally important, helping business owners strengthen their capabilities. Besides this, fostering green innovation and sustainable business practices can position MSMEs for long-term relevance in an evolving market. Finally, connecting small businesses to both national and global value chains through digital platforms will open up wider opportunities for trade, collaboration, and growth.

As India moves toward its Viksit Bharat 2047 vision, empowering its young entrepreneurs to build, adapt, and lead will be one of the strongest levers of inclusive growth.