When the Prime Minister addressed the nation from Hyderabad earlier this month, the headlines wrote the surface message: work from home, cut fuel consumption, brace for impact. Commentators reached for familiar vocabulary – import vulnerability, current account pressure, rupee at the edge. The doomsday machinery ran efficiently.
What got lost in the noise was the implied message. The one embedded inside the first. Not the crisis-management directive, but the structural argument: that India’s next phase of growth cannot be borrowed from the global cycle. It must be built from within.
That instinct to look inward and build domestic resilience is the correct one. What this moment demands is that it be translated into a specific economic action. That action is the systematic opening of equity capital to India’s mid-market businesses.
The Load-Bearing Layer
India’s family-owned manufacturers, regional business operators, service providers i.e. all together the mid-sized companies – those in the ₹50 to ₹300 crore revenue range are the quiet, load-bearing layer of the Indian economy. They employ the most people, anchor the most supply chains, and generate the most durable economic activity across the country. Most have been built over decades through bank credit and reinvested cash flows. That discipline is a genuine achievement. But it is also a ceiling.
A business growing entirely on internal accruals cannot simultaneously expand geographically, invest in technology, upgrade its talent base, and fund the kind of R&D that makes a product globally competitive. These things require patient, long-duration equity capital. And for most businesses in this range, the knowledge of equity capital, the process for accessing it, and the conditions that make a business ready to receive it are still not well understood.
Equity Capital Does More Than Finance
There is a fair observation that many mid-market businesses are not yet structured for institutional investment that their governance, financial reporting, and management depth need to improve before equity capital can flow to them. The observation is accurate. But the causal sequence is usually misread.
When a founder raises institutional equity for the first time, the discipline that comes with the process transforms how the business is run. Financials get audited to a standard that surfaces inefficiencies previously invisible. Management structures become less dependent on a single person. A board with independent voices begins to ask the questions that sharpen strategic clarity. The companies that go through a PE raise or an SME listing do not merely end up with more capital. They end up with better institutions.
Equity-backed mid-market companies upgrade their supply chains, pay vendors faster, invest in worker skills, and adopt technology at rates that debt-funded peers do not. The compounding effect on the broader economy through better working capital velocity, reduced NPA risk in the banking system, and higher tax compliance is material. Expanding equity access is therefore not only a financing intervention but a structural lever for building a more resilient, transparent, and internationally competitive economy.
What the Government Has Built
The Prime Minister has stated that his government’s ambition is for Indian MSMEs to “scale from local to global.” He has called on the private sector to “invest boldly in R&D, supply chains, and quality.” These are the right ambitions. The policy architecture being built to support them deserves to be acknowledged – the ₹1 lakh crore Research, Development and Innovation Fund, SEBI’s reformed SME IPO platform, the rationalised framework for setting up AIFs. These are genuine and well-designed steps.
What remains to be strengthened is the bridge between this architecture and the midmarket businesses that are its intended beneficiaries. That bridge has three spans.
The first is awareness. Most mid-market founders carry an inaccurate and limiting mental model of what equity capital involves – that it means surrendering control, submitting to long due diligence, and being permanently second-guessed. The reality of a well-structured growth equity capital is fundamentally different. India’s industry associations at the national and state level, and the government’s own entrepreneurship platforms, have the reach to correct this misunderstanding at scale. What is needed is the institutional intent to do so.
The second is the velocity of domestic capital. India’s private equity market remains concentrated in large-cap transactions. The mid-market segment where the volume of opportunity is substantial is not adequately served by capital pools that are sized and structured for it. The government can change this directly: by building government anchored mid-market equity fund, providing co-investment incentives for domestic funds, offering first stop loss guarantees for priority sector investments and by rationalising the tax treatment of domestically domiciled fund structures. A meaningful portion of the capital accumulating in India’s mutual funds, family offices, and institutional pools needs to find its way to mid-market businesses. The conditions for that to happen can be harmonized to channelize quicker and substantive equity capital.
The third is the speed and efficiency of the working capital cycle. Every rupee trapped in delayed receivables or pending GST refunds is a rupee withheld from productive reinvestment. Further strengthening India’s financial plumbing – TReDS adoption, MSME credit guarantee processing, trade receivable financing will massively help the mid-market businesses. Compressing this cycle, even modestly and systematically, would release productive capital at scale without a rupee of additional government expenditure.
The Moment and the Opportunity
The Prime Minister’s appeal for economic self-reliance was not a counsel of retreat. It was a call to recognise that India’s deepest strengths are internal and that in a turbulent world, nations that know how to mobilise those strengths are the ones that emerge stronger. The mid-market businesses that have quietly built the real economy over many decades are exactly those strengths. Giving them equity capital, and allowing that capital to do what it always does – raise governance, sharpen ambition, and compound value. This is how India can turn this moment of external geo-political crisis into the foundation for its next decade of growth.
[This article is authored by Varun Jhaveri is the National Incharge for Policy and Research at the BJP Youth Wing (BJYM)].
(The views expressed are personal)
