Why Investing In Women-Led Micro Businesses Is The Key To Economic Growth

Across India, women are building micro businesses that are deeply rooted in their communities—running handloom units, food processing centres, beauty salons, and small retail shops. These are more than income-generating ventures. They represent resilience, local leadership, and quiet transformation. Yet, women-led micro businesses remain at the periphery of mainstream finance, policy, and visibility.

Investing in these businesses is not just a gender equality issue—it’s a powerful, scalable strategy for driving inclusive economic growth. At Villgro, we’ve learned that when we support women entrepreneurs—especially through innovative financial models—we catalyse real systemic change.

A Missed Economic Opportunity

According to the Ministry of MSME, just 20.5% of enterprises registered on the Udyam portal since 2020 are women-owned. Even this figure is inflated—research suggests that 10% to 30% of these may not be actively run by women. The majority are informal, micro-scale operations with minimal access to formal credit or digital infrastructure.

This underrepresentation has a cost. The World Bank reports that India’s GDP growth rate would climb above 9% if women had an equitable share of jobs and that India could boost its growth by 1.5 percentage points per year if just 50% of women could join the workforce. Supporting women-led micro enterprises can help recover this lost potential.

The Power of Investing in Women

We’ve seen that investing in women means investing in whole communities. Women entrepreneurs are more likely to reinvest their earnings in their families—improving nutrition, education, and health. This ripple effect breaks the cycle of poverty and creates intergenerational benefits that conventional economic models often overlook.

Women don’t grow alone. They employ other women, buy from women-led suppliers, and act as role models in their communities. One empowered woman becomes a catalyst for many. This peer-to-peer upliftment is especially transformative in low-income and rural settings.

The Case for Trust and Targeted Capital

Despite their strong performance, women entrepreneurs remain underserved by traditional financial systems. They face systemic barriers like lack of collateral, credit history, and institutional gender bias. And yet, data tells a different story: women have higher repayment rates, are more loyal to financial institutions, and build long-term financial relationships.

At Villgro, we’ve developed blended finance solutions that combine debt and philanthropy to de-risk investments in women entrepreneurs. Through catalytic philanthropic capital, we can support early-stage businesses and create pathways for them to become viable borrowers. These financial instruments not only unlock credit but also build a track record for women to access mainstream finance in the future.

By reducing the perceived risk through innovative financing models, we’re showing that the problem isn’t women’s lack of capability—it’s the system’s lack of imagination.

Formalising Economic Participation

For many women, formal employment is inaccessible due to mobility restrictions, care responsibilities, and social norms. Micro-entrepreneurship offers an alternative route to formal inclusion. When women run businesses, they become visible economic actors with access to credit, legal protections, and public services.

Supporting these entrepreneurs is not just a social imperative—it’s a productivity strategy. Formalising their enterprises brings them into the economic mainstream, strengthens local economies, and contributes directly to GDP.

Shifting Power, Not Just Access

True empowerment means shifting financial power into women’s hands. Access to tools and training is essential, but not enough. Women have historically been excluded from asset ownership, inheritance, and financial decision-making. Investing in women-led businesses challenges these norms and builds long-term autonomy.

Financial independence is foundational to voice, choice, and control—and ultimately, to gender equality.

The Time Is Now

Women-led micro businesses represent one of India’s greatest untapped economic opportunities. They are resilient, rooted in community, and capable of transforming local economies. Through innovative financing models and inclusive ecosystems, we can unlock their full potential.

At Villgro, we’ve seen that when we design for inclusion, and finance with intention, women entrepreneurs thrive. And when women rise, entire communities rise with them.

It’s not just good development. It’s smart economics—and it’s time.

Authored by Vibha Tilwalli Sharma, Lead, Impact Finance, Villgro. Views expressed by the author are their own.