Micro, Small, and Medium Enterprises (MSMEs) are vital to India’s economic growth, contributing around 30% to the national GDP and employing over 110 million people. Their agility, innovation, and widespread presence make them essential for industrial diversification and inclusive growth. As of February 2025, India has seen a surge in MSME activity with over 59.3 million registered enterprises. With increasing digitisation and widespread adoption of mobile, cloud, and AI tools, MSMEs are more connected than ever, but also more exposed to cybersecurity threats.
A recent Mastercard SME Cybersecurity Study suggests that 53% of Indian SMEs have experienced a cyberattack, with 23% forced to shut down operations as a result. The takeaway is clear: cybersecurity is no longer optional—it’s a critical pillar of business continuity and resilience.
Here’s a look at five of the most common cyber threats faced by MSMEs today and the best ways to mitigate them:
Phishing
Phishing remains the most common cyber threat, impacting 34% of Indian SMEs. These attacks typically involve cybercriminals impersonating trusted entities, such as banks, vendors, or company executives, via email or SMS to steal sensitive information like passwords or OTPs (one-time passwords). To defend against such threats, small businesses should prioritise employee training to recognise suspicious messages, adopt secure email platforms with advanced spam filters, and implement multi-factor authentication (MFA). Additionally, investing in AI-powered email security solutions and fostering a culture of verification, where employees are encouraged to double-check unusual communications, can significantly enhance protection.
Ransomware
Ransomware is a type of malicious software that encrypts a victim’s data, rendering it inaccessible until a ransom is paid, often in cryptocurrency. In 2025, these attacks have become increasingly targeted and sophisticated, with cybercriminals not only demanding payment but also threatening to leak sensitive data if their demands are not met. To mitigate the risk, businesses should maintain regular, encrypted backups stored both online and offline to ensure data recovery without paying a ransom. Implementing advanced Endpoint Detection and Response (EDR) tools can help detect and contain threats early. It’s also critical to keep all software and operating systems up to date with the latest security patches. Additionally, using a reputable antivirus solution can significantly strengthen an organisation’s defense posture.
Data Breaches
With the rapid rise of digital payments and data-driven operations, small businesses now manage vast amounts of sensitive customer and financial information, making them attractive targets for data breaches. To protect this data, MSMES need to implement end-to-end encryption, use secure cloud storage, and enforce strict access controls, ensuring that only authorised personnel can handle critical information. Regular data audits and real-time monitoring of access patterns can help identify vulnerabilities and detect suspicious activity early. Additionally, choosing cloud service providers that comply with recognised security standards, such as ISO 27001 or SOC 2, adds an extra layer of assurance.
Identity Theft
Identity theft attacks occur when malicious actors impersonate business owners or employees to gain unauthorised access to sensitive data or financial systems, often resulting in fraud and data breaches. To mitigate this risk, businesses should implement multi-factor authentication (MFA), enforce strong password policies, and provide regular employee training to recognise and respond to impersonation attempts. Strengthening defenses further involves real-time monitoring for unusual activity and securing access to cloud platforms with role-based permissions.
Hacking
Hacking remains a significant cybersecurity threat, with 32% of Indian MSMEs reporting incidents where cybercriminals exploited vulnerabilities in software or network systems to gain unauthorised access. To strengthen their defenses, businesses must adopt a proactive approach, which includes regularly updating software, maintaining robust firewalls, enforcing strong access controls, and conducting routine vulnerability assessments.
Indian MSMEs’ digital-first approach also makes them increasingly vulnerable to cyber threats. A single breach can compromise sensitive data, disrupt operations, damage customer trust, and in severe cases, lead to business closure. The good news is that cybersecurity doesn’t have to be overwhelming or expensive. By understanding common threats and adopting proactive, practical measures—like strong authentication, regular updates, and employee awareness—MSMEs can build a resilient security posture. As highlighted in Mastercard’s study, cybersecurity is no longer just a protective measure—it’s a strategic enabler that empowers businesses to grow with confidence in a connected world.
