Author(s): Supriya G R,Dr. Roopadarshini S
ABSTRACT Background: Micro, Small and Medium Enterprises (MSMEs) constitute an important component of India's economic structure through their contribution to employment, productivity, exports, entrepreneurship and regional economic activity. However, their ability to generate sustained productivity-led growth remains constrained by limited access to finance, technology, skills, institutional support and markets. Purpose: This study examines how MSME capabilities can contribute to India's broader economic transformation and support the country's transition towards a five-trillion-dollar economy. Method: A systematic literature review (SLR) guided by the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) framework was undertaken. Peer-reviewed literature published between 2021 and 2025 was identified through Scopus and Web of Science, supplemented by backward and forward citation searching. From 1,286 records initially identified, 65 studies were retained for qualitative and thematic synthesis. The literature was analysed across finance, digitalisation, innovation, entrepreneurship, human capital, employment, exports, resilience, sustainability and regional development. Findings: The synthesis indicates that MSME performance is influenced not by individual resources alone but by the interaction of financial, technological, human, entrepreneurial and institutional capabilities. Finance supports productive investment, digitalisation strengthens market access and operational efficiency, human capital enables technology utilisation, and innovation and entrepreneurial capability support competitiveness and upgrading. Resilience, sustainability and export capability further strengthen the contribution of MSMEs to broader economic outcomes. Contribution: The study develops an integrated five-stage MSME capability framework linking ecosystem conditions, enterprise capabilities, intermediate performance outcomes, broader economic outcomes and national economic impact. Implications: The findings suggest that MSME policy should move beyond isolated interventions towards coordinated capability-building strategies that strengthen productivity, innovation, resilience, employment, exports and sustainable growth.