In FY2021, post-COVID, the SME exchanges of the BSE and NSE saw 27 new listings. Fast forward five years later, and that number has grown to 242 – almost 10x the number! The SME IPO market has quietly transformed into a dynamic segment of the capital markets in India. The SME platforms have helped propel this growth engine, giving SMEs (small and medium enterprises) better access to public markets and investors.
Nearly 10x growth, slow and steady
Here is a snapshot of how the market has grown, from a report by IPO Platform. Here are the numbers at a glance:
| Financial Year | BSE SME IPOs | YoY % increase vs previous year |
| FY21 | 8 | – |
| FY22 | 31 | 287% |
| FY23 | 62 | 100% |
| FY24 | 139 | 124% |
| FY25 | 164 | 18% |
At a glance, one can ascertain that SME IPOs have increased nearly ten-fold from FY21 to FY25, and BSE SME’s share has strengthened noticeably since FY23. This “boom” is noteworthy not just because of the numbers, but also because it signals that a large number of India’s smaller companies are turning to the public markets, rather than venture capital or private equity, to fuel their growth.
Have exchanges made listing more feasible?
Some of the credit should go to the BSE itself, for creating a more favourable environment for companies looking to list.
- A dedicated platform: The BSE SME exchange was created to provide accessible listing routes for smaller companies with comparatively less stringent criteria than the main boards. These structural differences make it easier for SMEs to go public. SME IPOs have lower paid-up capital requirements and fewer minimum allottees, making listing more feasible for SMEs than mainboard IPOs.
- Regulatory adjustments: While the capital requirements are lower for SMEs compared to larger companies looking to list, over the years SEBI has put measures in place to improve listing quality. These include recent measures like launching an IPO only if a business has made a profit of 1 crore rupees from operations in recent years (as prescribed by SEBO), and shares being sold by existing shareholders cannot exceed 20% of the total issue size.
- Stronger ecosystem: Listings have also accelerated because of a strengthening ecosystem that supports companies before, during, and after listing. This ecosystem effect is visible across merchant bankers, brokers, analysts, and exchanges and is reinforced by better-defined migration rules that enable SMEs to eventually move to the main board.
- Listing as a path to raising capital and gaining visibility: Another compelling reason for the surge in SME IPOs is the role public markets play in providing resources that private channels alone cannot match. Through an IPO on BSE SME, companies primarily raise fresh capital, which is money that can be deployed for expansion, capacity building, working capital, technology upgrades, and strategic acquisitions. This is particularly vital for SMEs, many of which operate in capital-intensive sectors like manufacturing, engineering, or healthcare services.
Beyond raising money, listing on an exchange gives a company visible market valuation — a publicly traded share price that reflects market sentiment. This enables management to benchmark the business’s performance, and may improve access to future capital.
What the rise in SME IPOs means for the markets and small companies as a segment
The narrative of SME IPOs surging since FY21 is a reflection of how the capital markets have evolved, individual SME success stories, as well as how investors view small and medium enterprises.
- Better and wider access to capital and retail investors: Access is more democratised now, and retail investors and investors in smaller cities have embraced SME IPOs alongside main board offerings. This signifies a broader base of market participation.
- Formalisation of small businesses: The capital entry requirements may be lower, but the listing requirements are more stringent — making small businesses focus on stronger corporate governance, audited financials, and transparent operations — all factors that help raise India’s overall market quality.
- Pathway to the mainboard: For ambitious SMEs who are at a nascent stage in their journey, an SME board listing is a springboard of sorts. Once they raise capital from the public, they are able to expand, and as these firms grow their revenues and profits after listing, migration to the main board becomes easier, and a practical next step, helping them unlock even more capital opportunities.
Is there momentum beyond 2025?
Things look promising in the years ahead as well. In the first half of FY26 alone, states like Gujarat and Maharashtra have led SME IPO activity both in count and capital mobilised, showing that the momentum is extending into the current financial year too.
The BSE SME platform has grown from a small, specialised segment into a busy space for young companies. The rise in IPOs reflects how India’s capital markets have changed, growing faster, becoming more open and more willing to support smaller businesses. It also shows how more small businesses view public markets: as partners in helping them expand and grow. In the years ahead, what investors should watch for is whether SME IPOs also create long-term value.
Sources
Reuters: India’s market regulator tightens rules for IPOs of small firms
IPO Platform: SME IPO Year wise Performance
Smallcap Spotlight: What NSE’s Stricter Rules for SME Platform to Mainboard Migration Mean