Surety Bonds Could Free Rs1.13 Trillion For MSMEs
Increasing MSME Contribution to GDP by 0.9%: AxiTrust Report
Aditya Tulsian, CEO & Co-Founder of AxiTrust
FinTech BizNews Service
Mumbai, 16 December 2025: AxiTrust has released the industry’s first surety impact report quantifying the macroeconomic impact of Surety Bonds on MSME growth. The analysis highlights that MSMEs, which already contribute close to 30 percent of national GDP, remain significantly constrained by collateral requirements. An estimated 4.5% of India’s GDP(Rs15 lakh crore) is immobilised inside Bank Guarantees. This is cash margins, fixed deposits and blocked limits—dead capital for MSMEs.
The report provides how insurance-backed Surety Bonds can become a catalyst for MSME-led economic growth.
Key insights include:- Rs1.13 lakh crore in MSME liquidity can be unlocked immediately by replacing eligible Bank Guarantees with Surety Bonds.
- Surety Bonds can increase MSMEs contribution to national GDP by 0.9%, driven by a 0.61 percent gain from the immediate liquidity unlock and a further 0.3 percent as expanded surety capacity scales over time.
- Expanded surety capacity can support ₹8.6 lakh crore in additional project activity annually over the next decade.
- Viewed through an MSME lens, the total benefit equals 2.5% of MSMEs’ current GDP contribution.
Aditya Tulsian, CEO & Co-Founder of AxiTrust, says: “India is shifting to a trust-first economy, and the impact will be transformational. When guarantees become digital, data-verified and collateral-light, MSMEs unlock the liquidity they need to win more contracts and deliver projects at scale. It is a structural unlock that can free lakhs of crores of working capital, lift GDP by releasing productive capacity and widen participation across Bharat. By modernizing our guarantee infrastructure, we reduce friction, accelerate project velocity and bring millions of enterprises into the formal growth engine. Surety bonds turn trust into economic output, and this is how India converts MSME potential into real GDP gains and moves decisively toward a five trillion-dollar economy.”
Policy Support and Digital Infrastructure Enabling Rapid ScaleOver the last two years, regulatory and technology reforms have created the conditions for non-collateral guarantees to scale:
- IRDAI permitted the use of insurance-backed Surety Bonds in 2022.
- Government financial rules were subsequently aligned to recognise Surety Bonds and electronic guarantees at par with traditional Bank Guarantees.
- India’s digital guarantee infrastructure has reduced verification time, lowered fraud risk and increased contractor confidence, enabling frictionless adoption for eligible projects.
- These developments have lowered both operational and collateral barriers for MSMEs, making Surety Bonds a viable and scalable alternative across public and private procurement.
Mass Adoption Shows Structural Shift
Market adoption reflects a decisive shift toward collateral-free guarantees. Indian insurers have underwritten close to Rs60,000 crore in Surety Bonds as of September 2025, compared to ₹5,000 crore in April 2024. This represents 12x growth within 18 months and signals strong demand across construction, EPC, infrastructure and allied sectors.
AxiTrust’s report shows that India’s shift to digital insurance-backed surety bonds can unlock large volumes of capital for MSMEs and provide meaningful momentum to GDP growth. The combination of supportive policy, reliable digital infrastructure and rising adoption indicates that non-collateral guarantees are positioned to become the preferred mechanism for project execution in the years ahead.
