Over the past few years, starting around the time of the Covid-triggered lockdowns in early 2020, I’ve noticed a pattern that continues to deepen:
Small and medium-sized businesses in India (particularly those with annual revenues below ₹25 crore for services/trading and below ₹100 crore for manufacturing or other sectors) are seeing stagnating or even declining top lines.
And this isn’t because demand has disappeared.
It’s because the rules of the game have changed – and many are still playing by the old playbook.
Two structural shifts lie at the heart of this transformation:
(1) The formalisation of the Indian economy
(2) The unprecedented inter-state market access enabled by GST
Earlier, smaller businesses could thrive in protected, often informal ecosystems. Their customer base was local, competition was limited, and advantages came from relationships, tax arbitrage, or market opacity. But GST has collapsed those walls.
Today, a well-run business in Indore can sell to customers in Hyderabad or Kochi with ease—without being disadvantaged for being “non-local.”
And formalisation has changed buyer expectations. Customers, vendors, and even employees increasingly prefer dealing with companies that have transparent billing, digital payment processes, and predictable service standards.
The biggest beneficiaries of this shift?
Larger companies with formal systems, established processes, and better tech adoption. These businesses were already operating at scale and are now leveraging that foundation to tap new markets and improve efficiencies.
But the middle tier – those who aren’t quite informal anymore, yet not fully systematised either – are being squeezed from both ends.
They’re too expensive to remain small, and too chaotic to compete with the big players.
There is, however, a way forward.
The only viable response is to get-up or get-out.
And getting up doesn’t have to mean massive capital infusion or radical change.
Often, it begins with something simpler: introducing systems and processes that bring order, visibility and repeatability to the business.
It means using technology as a strategic lever, not just for cost-cutting, but to unlock scale, build better customer experiences, and create a culture of consistency.
This is no longer optional.
It’s existential.
The businesses that act now – by formalising, systemising and professionalising – will not only survive but thrive in this new economy.
The rest? They’ll slowly fade away, not because they lacked talent or hustle but because they missed the shift in how value is created and delivered in today’s India.