MSME stress deepened in FY26 with closures rising sharply to 62,747 from 39,446 in FY25, impacting over 3.7 lakh jobs. As of June 2026, 18,154 units had shut, affecting 1.25 lakh workers. Despite closures, overall MSME employment grew 16.5% year-on-year to 80.5 million, led by the trading sector, with Uttar Pradesh employing the largest workforce. Delays in highway projects triggered penalties of ₹2,732 crore over three years, with only ₹780 crore recovered so far.