3,453 MSMEs Closed in Odisha: Why Are Small Businesses Struggling?

Bhubaneswar: Odisha has witnessed the closure of 3,453 Micro, Small and Medium Enterprises (MSMEs) over the last five financial years. While the state has seen a sharp rise in new MSME registrations, thousands of businesses have failed to survive, highlighting persistent structural challenges.

According to data from the Union Ministry of MSME, closures increased steadily between 2021–22 and 2025–26.

The highest number of closures was reported in Khordha, Cuttack, Ganjam, and Balasore.

A total of 209 MSMEs were closed in Khordha district, with 189 closures occurring in 2025–26 alone.

According to data presented by the Central Government, only 118 MSMEs were shut down across Odisha in 2021–22. The number increased steadily to:

• 217 in 2022–23
• 431 in 2023–24
• 875 in 2024–25

Data from the Udyam Registration Portal and the Udyam Assist Portal show that during 2025–26, the highest number of MSME closures occurred in:

• Khordha: 297
• Cuttack: 157
• Ganjam: 119
• Balasore: 118

Additionally, the number of closed MSMEs ranged between 50 and 100 in the districts of Angul, Balangir, Bargarh, Bhadrak, Jagatsinghpur, Jajpur, Jharsuguda, Kendrapara, Mayurbhanj, Puri, and Sundargarh.

Why are MSMEs shutting down?

Financial constraints

Lack of timely working capital remains the biggest challenge for MSMEs. Many small businesses struggle to secure bank loans because of strict collateral requirements and limited credit history.

Delayed payments from government departments and large companies also create severe cash-flow problems, forcing many businesses to shut down.

Rising costs

Increasing prices of raw materials, electricity, fuel, transportation, and labour have significantly raised production costs.

Most MSMEs operate on thin profit margins and cannot easily pass these higher costs on to customers.

Limited market access

Many MSMEs depend on local markets and face intense competition from large companies, organised retail chains, and e-commerce platforms.

Weak branding and limited marketing support make it difficult for small businesses to expand beyond regional markets.

Outdated technology

Many enterprises continue to use old machinery because they cannot afford modern equipment.

Low investment in automation and digital technology reduces productivity and competitiveness.

Skilled labour shortage

Finding and retaining trained workers has become increasingly difficult.

Migration of skilled labour to larger cities has further affected manufacturing and service-based MSMEs across Odisha.

Compliance challenges

Small entrepreneurs often struggle with GST filings, labour regulations, and other statutory requirements.

Limited awareness and administrative capacity increase compliance costs.

Infrastructure issues

Inadequate industrial infrastructure, logistics bottlenecks, and inconsistent utility services in some areas continue to affect business operations.

Closures don't tell the full story

Although 3,453 MSMEs have closed, Odisha has also witnessed rapid growth in new enterprise registrations.

Districts such as Khordha, Cuttack, and Ganjam have the highest number of MSMEs in the state. As a result, they also record the highest number of business closures.

Higher closures in these districts do not necessarily indicate weaker business conditions—they also reflect higher business activity.

Despite the closures, the total number of MSMEs in Odisha grew by more than five times during the past five financial years.

The number of registered MSMEs was:

• 104,992 in 2021–22
• 170,134 in 2022–23
• 1,041,129 in 2024–25
• 579,634 in 2025–26

In 2025–26, district-wise MSME registrations were:

• Khordha: 74,377
• Cuttack: 49,117
• Ganjam: 47,224
• Balasore: 35,557
• Puri: 33,537
• Bargarh: 27,359
• Bhadrak: 25,037
• Sundargarh: 22,497

Government support

The Union Ministry of MSME said Odisha received 2.97 lakh credit guarantees worth ₹34,157 crore over the last five years under the Credit Guarantee Scheme.

However, experts believe financial support alone is not enough.

What needs to change?

Experts suggest several measures to improve MSME survival:

• Faster payment of dues.

• Easier access to collateral-free loans.

• Technology upgrades.

• Better marketing and export support.

• Skill development programmes.

• Simpler compliance procedures.

• Improved industrial infrastructure.

The Road Ahead

MSMEs are the backbone of Odisha's economy, creating jobs and supporting local industries.

While new businesses continue to emerge, improving their survival rate is now the biggest challenge. Addressing financing gaps, delayed payments, rising costs, technology adoption, and market access will be crucial to building a stronger and more resilient MSME sector in Odisha.