Reversing the outmigration of lakhs of rural youth from places across the Northeast on account of agricultural distress and lack of industrial expansion requires the creation of alternative livelihood avenues. The growth of Micro, Small and Medium Enterprises (MSMEs) plays a crucial role in employment generation in a region in which a dearth of availability of land poses a roadblock for big industrial expansion. Underutilisation of funds allocated by the Ministry of MSME for the region is baffling and points towards the persistence of inherent gaps in the system. The Parliamentary Standing Committee on Industry has observed underutilisation of allocated funds in the region in multiple financial years, including 2024-25, and consistent underperformance in expenditure across various schemes aimed at MSME promotion. Easier access to credit and better market linkage are more crucial for commercial sustainability of MSMEs. While government schemes act as catalysts, any commercial venture on MSME scale to become viable and sustainable requires innovative ideas to stand on its own and not be overdependent on government subsidies. Nevertheless, optimal utilisation of MSME funds is critical to creating an enabling ecosystem. The parliamentary panel in a recent report observes a decline in the number of microenterprises supported under the Prime Minister’s Employment Generation Programme (PMEGP) scheme and significant disparities in production, sales, and employment across NER states. To boost entrepreneurship and create sustainable microenterprises, it recommends that the Ministry of MSME focus on boosting entrepreneurship and microenterprise growth in the region by targeting underperforming states with specialised support, training, and mentorship. The follow-up on training, mentorship, etc., is essential to test the effectiveness of such programmes in motivating the trainees and mentees to come up with commercially viable entrepreneurial ideas and approach the right authorities for credit and other support. The PMEGP has set the upper limit of project cost at Rs 50 lakh for manufacturing units and Rs 20 lakh for service sector units, but the cost of land cannot be included in the project cost. Availability of land for setting up an industrial unit even on an MSME scale in the region is not easy, and the purchase of land involves huge costs, and often entrepreneurial dreams wither away for many because of the financial constraints in the acquisition of suitably located land. The region has a vibrant tradition of handloom and handicraft practices that offer variety, with several hundred different tribes and communities keeping these alive generation after generation. The NITI Aayog observed that wide-ranging varieties make the region a perfect place for robust MSME growth. Yet, the region accounting for less than two per percent of total MSMEs in the country, according to NITI Aayog estimates, speaks volumes about critical gaps between policies, schemes and programmes to boost MSME growth in the region and execution. This is despite a substantial increase in advances towards MSMEs compared to advances towards the agriculture sector in the region. The challenge for new enterprises in the MSME sectors is to identify the strengths and weaknesses of their business ideas, availability of raw materials, cost-effectiveness in the case of manufacturing units such as food processing units, and marketing challenges. Delivery of final goods produced in an MSME unit to the end customer plays the most crucial role in commercial viability, even when there is demand. More than subsidy schemes and programmes, the government support system focusing on facilitating the creation of the MSME value chain in the region deserves a policy push. The region can, however, expect growth in the service sector MSMEs with improvement in connectivity and spectacular growth in the tourism industry. Food processing units such as MSMEs manufacturing jam, jellies, honey, and dairy products in the region can cater to demand in hotels and tourist lodges provided quality control for food safety and food-grade packaging is prioritised to meet international food safety standards. The parliamentary panel’s recommendation for revising the definition of MSMEs and creating a new category –nano with the lowest financial criteria around Rs. 10 lakh – has great significance for the Northeast region with a low capital base in rural households. The committee notes that, as of December 31, 2024, out of the 5.77 crore total MSMEs in the country, 5.69 crore are micro, 7.3 lakh are small, and 69,000 are medium. Despite this, the new revised investment and turnover limits could potentially undermine the purpose of MSMEs by elevating micro-enterprises beyond their original scope. The creation of the nano category, the committee felt, would ensure that businesses with a turnover above Rs 2.5 crore do not deviate from the core purpose of driving employment generation and supporting smaller enterprises. Therefore, the region with limited scope for employment in traditional agriculture and allied sectors, boosting MSME growth is a pragmatic option to drive alternative livelihood growth. Robust growth of nano categories will drive growth of enterprises on micro, small and medium scales in the northeastern region.