Over the years, MSME sector has emerged as a highly vibrant and dynamic sector of the Indian economy. MSMEs contribute to approximately 30% of the Country's GDP, 36% of the manufacturing output and 43.6% of exports. MSMEs provide the largest share of employment after agriculture and hence, the development of MSME sector can contribute enormously to the socio-economic development of the country. Recognizing the transformative potential of MSMEs, Telangana has strategically positioned the development of this sector as a catalyst for job creation and regional equilibrium. The MSME sector in Telangana manufactures a variety of products with a high concentration of Micro and Small units belonging in the Sectors of food, mineral and building materials, drugs and pharmaceuticals, fabricated materials, trading and service sector. Telangana has identified development of MSMEs as a catalyst for job creation and balanced regional development. Indian School of Business and CII Telangana chapter embarked on this study to assess the current state of MSME in Telangana. The study explored the challenges faced by MSMEs, sustainability, Government support to MSMEs and innovation strategies followed by MSMEs in the state of Telangana. The report identifies some of the interesting facts about the key barriers for MSME’s, digital technology up-gradation status, innovation culture at MSMEs, multifarious implementation of policies and regulations to promote development of MSME’s in the state. The study is an outcome of both primary and secondary research. Based on detailed survey findings from the industry leaders and elaborate review of government reports and website data, the recommendations are laid out for Government and policymakers for providing a roadmap for the development of MSMEs in the State of Telangana. A concerted effort of both Government and industry will promote the emergence of an inclusive ecosystem to develop vibrant MSME sector.