Micro, Small and Medium Enterprises (MSMEs) play a pivotal role in the economic and social development of the country due to its significant contribution in terms of output, exports and employment with its effective, efficient, flexible and innovative entrepreneurial spirit. MSMEs contribute 45% in the industrial output, 40% of exports, employing 73 million people every year. It produces more than 8,000 quality products for the Indian and international markets. Its contribution towards GDP in 2011 was 17% which increased to 22% in 2012. For a developing nation like India, where the labour is abundant and capital is scarce, the small sector is a major source of employment for millions of people. Keeping in view the importance of MSMEs, the Indian government has included this sector in its five-year plans. But, still the sector hampered by the problems like finance, marketing and low quality. Taking into account the enormous potential of the small sector, the entrepreneurs and the policy- makers must act collectively to facilitate growth in this sector. This paper analyses the various challenges and opportunities associated with MSMEs in India.