ASEAN–India Synergy For MSME Growth: A Blueprint For South–South Collaboration

Micro, Small, and Medium Enterprises (MSMEs) constitute over 95% of formal enterprises in both ASEAN Member States and India, serving as a critical engine for employment, innovation, and inclusive economic growth. Despite their significance, MSMEs continue to face deeply rooted structural constraints ranging from financing gaps and limited technological capacity to regulatory fragmentation and exclusion from regional value chains.

Illustration by The Geostrata

The COVID-19 pandemic exposed and intensified these vulnerabilities, highlighting the need for coordinated and resilient policy responses.

In this context, the ASEAN–India partnership provides a timely platform to unlock shared potential through a structured model of South–South cooperation. India’s progress in digital public infrastructure, financial inclusion, and scalable grassroots innovation offers replicable solutions for ASEAN, while ASEAN’s experience in regional economic integration and diverse production ecosystems presents fertile ground for collaboration.

This paper outlines five strategic pillars for ASEAN–India MSME collaboration: policy harmonisation, digital transformation, access to finance, capacity building, and value chain integration. It calls for institutional mechanisms such as an ASEAN–India MSME Council, regionally anchored innovation hubs, and co-financed pilot programs targeting underserved groups, particularly women- and youth-led enterprises.

A well-coordinated ASEAN–India blueprint for MSME development rooted in mutual learning and joint innovation can deliver durable economic resilience, expand entrepreneurial opportunity, and position the region as a leading example of inclusive South–South cooperation.

INTRODUCTION

MSMEs are foundational to the economic architecture of both ASEAN and India, representing the majority of registered enterprises and employing a substantial share of the labour force. Their contribution to GDP and innovation is widely acknowledged, yet their structural challenges persist.

Access to affordable finance, inadequate technological integration, complex regulatory environments, and limited participation in global value chains collectively inhibit MSME growth and competitiveness.

The COVID-19 pandemic underscored these weaknesses, forcing thousands of enterprises into closure and further widening inequality.

As the region enters a phase of post-pandemic reconstruction, it is imperative to reposition MSMEs as strategic actors within regional economic cooperation. The ASEAN–India dialogue partnership, underpinned by principles of equity, solidarity, and mutual benefit, offers a compelling opportunity to reimagine MSME development through a South–South lens.

India’s achievements in scalable digital innovations, such as the Unified Payments Interface (UPI) and Aadhaar-enabled services, demonstrate the feasibility of rapid digital onboarding even among informal enterprises.

Simultaneously, ASEAN’s existing frameworks, like the ASEAN Economic Community (AEC) and the ASEAN SME Policy Index, provide institutional traction for cross-border enterprise collaboration. Together, these assets create a strong foundation for developing an integrated, inclusive, and innovation-driven MSME ecosystem.

This paper advances a blueprint for ASEAN–India collaboration on MSMEs, identifying strategic policy linkages and proposing implementable mechanisms to operationalise this vision.

KEY PILLARS FOR ASEAN–INDIA MSME SYNERGY

Policy Harmonisation: Fragmented regulatory regimes remain a key constraint on cross-border MSME expansion. Harmonising standards, streamlining business registration, and enabling mutual recognition of product certifications can significantly reduce compliance costs. An ASEAN–India MSME Policy Dialogue Mechanism could institutionalise efforts to align regulatory practices and promote regional MSME integration.

Digital Transformation: Digitalisation is critical to enhancing MSME productivity and competitiveness. India’s digital public infrastructure (e.g., UPI, e-KYC, DigiLocker) provides scalable templates for ASEAN countries seeking to onboard informal enterprises and expand digital financial inclusion.

Joint initiatives such as ASEAN–India Digital Labs could facilitate technology transfer and localisation, while collaborative e-commerce capacity-building programs could bridge existing digital divides.

Access to Finance: Access to capital remains a persistent challenge, particularly for micro and women-led enterprises. ASEAN–India cooperation could support the development of blended finance instruments, diaspora-backed investment platforms, and regional credit guarantee schemes. Knowledge exchange on India’s Jan Dhan Yojana, MUDRA, and Account Aggregator framework could also inform innovative financing models adapted to local contexts.

Capacity Building and Innovation: Human capital development is essential to strengthening MSME resilience and scaling innovation. Regional centres of excellence, cross-border incubators, and technical training programs can address skills gaps and support enterprise growth. Tailored initiatives focusing on green enterprises, youth entrepreneurs, and digital skill acquisition would ensure inclusion and sustainability.

Regional Value Chain Integration: MSMEs often remain peripheral to formal supply chains. ASEAN–India cooperation should focus on sector-specific supplier development programs, integrated logistics corridors, and B2B platforms to foster enterprise linkages. Priority sectors could include agro-processing, healthcare, textiles, and renewable energy areas where ASEAN and Indian SMEs can offer complementary strengths.

INSTITUTIONAL MECHANISMS AND PILOT INITIATIVES

To operationalise these five pillars, ASEAN and India should pursue institutional and programmatic tools designed to ensure sustainability, scalability, and inclusion:

• ASEAN–India MSME Council: A permanent multi-stakeholder platform to coordinate policies, share best practices, and monitor implementation progress. It should include government, private sector, academic, and civil society representation.

  
  

• Joint Innovation Hubs: Regionally distributed centres that facilitate co-development of technologies, business models, and sustainable practices, especially for women and youth entrepreneurs.

  
  

• Co-Financed Pilot Programs: Time-bound, impact-driven initiatives focused on climate-resilient MSMEs, digital exporters, and women-led enterprises. Programs could be supported by development finance institutions, regional venture capital, and public-private partnerships.

  
  

CONCLUSION

The ASEAN–India partnership offers a critical opportunity to build a future-ready MSME ecosystem rooted in mutual benefit, innovation, and inclusion. By co-developing a strategic blueprint for MSME growth and resilience, both regions can move from dialogue to delivery, creating shared prosperity and demonstrating the power of South–South cooperation in action.

Institutionalising this cooperation through structured platforms, targeted investment, and cross-border capacity building can empower millions of small entrepreneurs and ensure they are not left behind in the region’s development trajectory. The time to act is now through practical collaboration, shared responsibility, and a long-term commitment to inclusive growth.

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BY PREETU MAHARSHI AND SHAMEERA NASREEN

TEAM GEOSTRATA

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