Micro, Small, and Medium Enterprises (MSMEs) constitute the backbone of India’s industrial economy, significantly contributing to employment generation, export promotion, and regional development. Gujarat, as one of India’s most industrialized states, hosts a vibrant MSME sector that plays a crucial role in its economic growth. This paper examines the current scenario, challenges, prospects, and policy implications for MSMEs in Gujarat. Through a comprehensive review of literature, government reports, and statistical data, the study highlights the sector’s contribution to the state’s industrial output, employment, and exports. The paper also discusses barriers faced by MSMEs, including financial constraints and technology adoption issues, and explores growth opportunities in emerging sectors. Recommendations are provided to enhance the competitiveness and sustainability of MSMEs in Gujarat.