MSMEs in Telangana Fostering the Economic Growth of the State

May 23, 2024
Updated on

Telangana, the dynamic and thriving southern state of India, is the country’s youngest state (29th). One of the cornerstones of Telangana’s robust economy lies in its Micro, Small, and Medium Enterprises (MSMEs). Telangana has emerged as a beacon of opportunity with a visionary approach towards fostering entrepreneurship. MSMEs in Telangana boast as a vibrant and diverse sector, playing a pivotal role in driving employment, spurring industrial growth, and propelling overall economic development. 

There are around 2.6 million MSMEs in Telangana, with 56% situated in rural areas and 44% in urban centres, showcasing the widespread reach and impact of this thriving sector. A report from Invest Telangana reveals an impressive track record of entrepreneurial success in the state, with 19,954 registered MSME units initiating operations since its inception.

These enterprises have collectively provided gainful employment to a remarkable 363,488 individuals. Within this ecosystem, micro-enterprises take the lead, numbering 13,546 and offering employment to 135,547 dedicated professionals. Telangana further boasts 5,830 small enterprises, creating opportunities for 165,242 skilled workers, while 578 medium enterprises employ 62,699 talented individuals. 

To support this thriving sector, Telangana State Industrial Infrastructure Corporation (TSIIC) has established 28 industrial parks spanning an extensive 2500 acres of land. Furthermore, the state is actively working on developing six new parks and upgrading twelve existing ones, reinforcing its commitment to providing a conducive environment for MSME growth and expansion.

Overview of Telangana

Telangana came into existence in June 2014. The state was carved out of the erstwhile Andhra Pradesh state, marking a significant moment in India’s history. Bordered by Maharashtra and Karnataka to the west, Odisha and Chhattisgarh to the north, and the restructured Andhra Pradesh to the south and east, Telangana occupies a unique location in the country’s landscape. Some of the tourist destinations in Telangana are Ramoji Film City, Golconda Fort, Salar Jung Museum, Taj Falaknuma Palace, Charminar, etc.

The Gross State Domestic Product (GSDP) of Telangana reached a staggering Rs. 13.27 lakh crore in 2022-23. According to the Telangana Socio-Economic Outlook 2023, Telangana’s GSDP has grown 15.6% from 2021-22. Hyderabad, the bustling capital city of Telangana, has emerged as a mecca for the IT and pharmaceutical sectors, driving the state’s economy to new heights. 

The presence of thriving sectors like Information Technology (IT), Information Technology Enabled Services (ITeS), pharmaceuticals, and cloud solutions has acted as a catalyst, driving the demand for data centres in Hyderabad. Notably, the city has attracted significant investments, with Amazon Web Services earmarking a staggering US$ 2.8 billion for a core data centre facility, while the National Payments Corporation of India (NPCI) is investing US$ 70 million in establishing its own tier-IV data centre. 

As a testament to its growth trajectory, Telangana has witnessed a substantial inflow of foreign direct investment (FDI), amounting to US$ 3,994 million between October 2019 and June 2022, positioning the state at an 8th rank in India in terms of FDI inflows. Hyderabad’s ascent in the data centre domain, coupled with its favourable investment climate, positions it as a key destination for industry leaders and underscores its growing prominence in the digital landscape.

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MSMEs in Telangana Contribute to 5 Major Industries


Telangana has established itself as a hub for the rapidly expanding information technology (IT) industry, with Hyderabad leading the charge. The state’s contribution to the IT and Information Technology Enabled Services (ITES) sector has been instrumental in putting India on the global IT map. The Telangana government has been proactive in fostering the growth of the IT sector by establishing Export Oriented Units (EOU), Software Technology Parks (STP), and Special Economic Zones (SEZs). 

The recent announcement by the central government to establish an Information Technology Investment Region (ITIR) in proximity to Hyderabad further cements the state’s position as a key player in the IT industry. The ITIR initiative is expected to create a staggering 1.5 million direct jobs and 5.3 million indirect jobs in the IT sector over the next five years. Telangana’s favourable investment climate, coupled with the government’s proactive measures, positions it as a compelling destination for IT and ITeS investments, further bolstering its position as a leading state in the Indian IT industry.

The IT/ITeS industry is a major contributor to Telangana’s economy, with over 1500 companies providing direct employment to more than 5.8 lakh professionals and indirect employment to over 7 lakh people. According to a report from another report from Invest Telangana, Telangana’s IT/ITeS exports have shown a growth at a rate of 17.93%, surpassing the national average of 8.09% and the rest of the country’s average of 6.92%.

In terms of India’s exports, Telangana’s share has increased from 10.6% to 11.6%, and the state has contributed a remarkable 23.5% to the national export growth in the current year. The government of Telangana is taking proactive measures to further enhance the state’s position in the IT/ITeS industry and attract more investment to the region.


Telangana’s significant contribution to the pharmaceutical sector solidifies its position as a key player in India’s pharmaceutical landscape. The state accounts for nearly one-third of the country’s pharmaceutical production and one-fifth of its pharmaceutical exports. With its robust infrastructure and conducive business environment, Telangana has emerged as a prominent pharmaceuticals manufacturing hub, attracting an investment of over Rs 10,000 crore (US$ 1.49 billion) in the life sciences sector over the past four years.

Hyderabad, aptly hailed as the Life Sciences Capital of India, hosts over 800 life sciences companies, showcasing the region’s thriving ecosystem and industry expertise. Telangana’s ambitious Vision 2030 aims to position the state as the leading life sciences hub in Asia, fueled by innovation-driven and tech-enabled growth. With a target of doubling the sectoral value to US$100 billion and creating 400,000 new jobs, Telangana’s vision reflects its determination to shape the future of the life sciences industry and reinforce its status as a global pharmaceutical powerhouse.

Food Processing

Telangana’s food processing sector holds a significant position as one of the 14 key thrust sectors identified in the state’s 2014 industrial policy framework. Currently, the food processing industry in Telangana adds substantial value by processing around 25% of the agricultural and allied output by value. The state’s abundant agricultural resources serve as a strong foundation for the sector’s growth. Telangana has achieved remarkable milestones in agricultural production, ranking first in the country for the production of turmeric and sweet orange based on the 2014-15 production data. Additionally, Telangana has earned recognition as a leader in the poultry and seed businesses, showcasing its expertise and influence in the agricultural domain. 

Furthermore, the state holds immense potential for the development of inland fisheries, organised meat processing, greenhouse cultivation, and exotic vegetable farming. To harness the full potential of the food processing sector, Telangana actively encourages value addition to agro-products, expansion of existing strengths, and collaboration with the national Food Processing Mission. The state has introduced numerous subsidies, policies, and schemes to support the sector, creating a favourable ecosystem for growth and innovation. 

Currently, Telangana boasts four major food park projects worth approximately Rs. 492 crores, seven integrated cold chain projects valued at around Rs. 208 crores, and 20 NMFP (National Mission on Food Processing) projects amounting to approximately Rs. 108 crores. These initiatives further demonstrate the state’s commitment to nurturing the food processing industry and driving economic prosperity through value addition and strategic partnerships.


The textile industry in Telangana boasts a remarkable history deeply rooted in the region’s cultural heritage. It is traced back to medieval times when the art of weaving durries reached here with the Mughals. For centuries, Telangana has been a hub of exquisite handloom fabrics, producing renowned legacy textiles such as Pochampally ikat, Gadwal silk, Mangalagiri cotton, and the intricate Bidri craft. These timeless textiles showcase the mastery of local weavers and artisans, embodying the rich tradition and creativity that define Telangana’s textile industry.

The state proudly boasts a magnificent infrastructure, including 50,000 power looms, 17,000 handlooms, and a highly skilled workforce. Telangana is the third-highest cotton-producing state in India. The state contributes significantly to the nation’s textile production, with an annual output of approximately 5 million bales across various textiles. The state’s textile prowess is complemented by a thriving spinning industry, with a collective capacity of approximately 1 million spindles. 

Furthermore, MSMEs in Telangana play a crucial role in other prominent textile clusters in Western India, underscoring their deep-rooted historical association and expertise in the industry. Telangana’s rich textile heritage, combined with its favourable location and skilled workforce, positions the state as a prominent player in the textile sector, poised for continued growth, innovation, and global recognition.


Telangana’s handicrafts have dominated the market for many years. The distinctiveness of these Telangana handicrafts is rooted in the way they are made. People from all over the world love and adore these handicrafts. Many people in the state still rely on the handicrafts sector. Warangal, renowned for its rich heritage in handloom weaving, boasts a vibrant community of over 20,000 skilled artisans producing a myriad of exquisite fabrics. The city is also home to a diverse range of small-scale industries, including steel fabrication, food processing, and plastic manufacturing units. 

In northern Telangana, Karimnagar takes pride in its flourishing MSME presence in the food processing sector, renowned for the production of delectable mango and tamarind pulp, among other processed food products. Meanwhile, Nizamabad, located in the northwestern part of the state, has carved a niche for itself in the textile and agro-based industries, with a strong focus on cotton, maise, and turmeric production. Telangana’s dynamic MSME landscape showcases the seamless fusion of tradition and innovation, exemplifying the state’s entrepreneurial spirit and commitment to sustained economic growth.

Policies and Schemes to Support MSMEs in Telangana

The state government of Telangana has championed numerous policies and schemes dedicated to fostering the growth and development of small businesses. These initiatives have played a pivotal role in nurturing the thriving MSME ecosystem in the state and bolstering its contribution to the overall economy. Among the many notable initiatives, two standout programs are worth highlighting:

Telangana Industrial Health Clinic Limited (TIHCL)

The Telangana Industrial Health Clinic Limited (TIHCL) stands as a pioneering industry initiative established by the state government with a focus on both diagnosis and cure for issues faced by MSMEs in Telangana. Serving as a lifeline for small businesses, TIHCL takes proactive measures to prevent the onset of financial distress by offering a range of services such as revival, restructuring, and rehabilitation. By addressing the financial challenges faced by MSMEs in Telangana, TIHCL enables these units to regain viability and sustainability, setting them on a path towards growth and success. 

Furthermore, this initiative plays a vital role in attracting investments to the manufacturing sector of MSMEs in Telangana, fostering an environment conducive to their expansion and development. Additionally, TIHCL prepares MSMEs in Telangana to explore opportunities in the equity markets, equipping them with the necessary knowledge and resources to achieve higher levels of growth. Through its comprehensive support, TIHCL plays a crucial role in creating a nurturing ecosystem for MSMEs in Telangana, thereby making significant contributions to the overall economic development of the state.

Telangana State GlobalLinker (TSGl)

Telangana State GlobalLinker (TSGl) is a powerful digital platform launched by the Telangana government to connect MSMEs in the state. Since its inception on 27th March 2019, the platform has registered over 7000 MSMEs in Telangana and more than 3 lakh from Southeast Asia. It provides an extensive range of tools and services to enable business growth and collaboration. The platform features a free e-marketplace that digitises stores and enhances the overall efficiency of SMEs. With TSGl, MSMEs in Telangana can easily create their own online stores for e-commerce activities, enabling them to expand their reach and explore new markets. 

In addition to this, the platform offers matchmaking services, allowing businesses to explore potential partnerships, collaborations, and business opportunities. TSGl also provides access to industry news, resources, and knowledge-sharing forums, which further assist MSMEs in Telangana to flourish. TSGl plays a pivotal role in the digital transformation of MSMEs in Telangana, promoting their competitiveness and enabling them to adapt to the digital economy. By fostering connections and facilitating business growth, TSGl contributes to the development and success of MSMEs in Telangana.


MSMEs in Telangana stand as a thriving hub of diverse industries. It encompasses a wide array of sectors that seamlessly blend traditional craftsmanship with modern innovation. From time-honoured industries like textiles, handicrafts, and food processing to cutting-edge sectors such as IT, biotechnology, and pharmaceuticals, the state offers a fertile ground for entrepreneurial ventures. 

Spread across various districts, including Hyderabad, Warangal, Karimnagar, and Nizamabad, MSMEs in Telangana contribute significantly to the state’s economic fabric. Hyderabad, the capital city, hosts a flourishing MSME ecosystem. Some notable clusters in the state, like Auto Nagar, Sanath Nagar, and Balanagar Industrial Estates, serve as vibrant centres of activity. Within these clusters, an abundance of MSMEs in Telangana thrive, ranging from engineering units and textile mills to chemical plants, driving industrial growth and innovation. 

MSMEs play a pivotal role in driving the economic development of India. With an estimated number of 63.38 million MSMEs in the country (according to the MSME Ministry’s annual report for 2021-22), their contribution to India’s GDP growth is significant. The MSME industry employs 40% of India’s workforce, which amounts to 110.98 million people, and it contributes 45% of the output and 40% of the exports. The Micro sector, comprising 630.5 lakh enterprises, accounts for over 99% of the total number of MSMEs in the country, while the Small and Medium sectors make up a smaller percentage. 

However, despite their significant contribution, MSMEs face various challenges, such as limited access to finance, lack of technical knowledge and skilled manpower, and inadequate infrastructure in suburban and rural areas. To address these constraints and support the growth of MSMEs, several Non-Banking Financial Companies (NBFCs), including Kinara Capital, have emerged as key players in providing financial solutions and support to MSMEs. These initiatives aim to empower MSMEs, bridge the gaps in resources, and facilitate their growth and success in the Indian business landscape.

To apply for a business loan online, MSME entrepreneurs can either visit Kinara’s website or the myKinara app and check their eligibility to get a business loan. If they qualify for the business loan eligibility, they can continue with the application process and submit the minimum documentation. The amount will be digitally transferred to their account within 24-hours. With the fully digital online application process, MSMEs in Telangana can apply for a business loan online without waiting for a long time. Also, we have a dedicated customer support team available between Monday – Friday (9.30 AM – 6.00 PM) at our toll free number 1800-103-2683 for any questions or assistance. This ensures that entrepreneurs can get the help they need throughout the loan process.

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