Micro, Small, and Medium enterprises (MSMEs) were the key drivers of India's economic growth before the COVID-19 epidemic, accounting for about 30% of the country's gross domestic product in 2019. MSMEs are the backbone of the Indian economy, generating jobs, modernization, exports, and overall economic expansion. Small and medium enterprises (SMEs), play a crucial role in expanding business, production, and exports in India, accounting for one-third of manufacturing and construction and 45% of exports. MSMEs, which account for 12 crore jobs, are the second-largest employer after agriculture. However, the sector has faced numerous obstacles, ranging from credit to marketing, and recent events such as demonetization and Goods and Service Tax have added fuel to the fire. As a result, profit-generating SMEs are a must for the country. As a result, utilizing a stochastic model method and Hidden Markov Chain, this study aims to find and access the hidden elements that affect the growth and performance of MSMEs in India. As a result, hidden variables were used to access three factors: micro, small, and medium firms. The hierarchical organization and decision-making methods are addressed by this hidden Markov approach. A simulation experiment provides a visual representation of the interrelationships between the three components stated above. The findings included monthly expenditures among MSMEs, as well as a comparative analysis of the three criteria under consideration. Finally, various key barriers to strategic performance of MSMEs, particularly export firms, such as uncontrolled marketing expenditure, a lack of financial resources for technology, research and development, and other areas, have an impact on export firms’ productivity levels; as a result, policy guidance and effective operation were discussed in the current study, and further research is justified.