Tighter framework and digitization will make MSMEs globally relevant

Come April 1, the reduction of guarantee fees for MSMEs will come into effect. The reduction is likely to be up to 50 per cent below Rs one crore. The new PM Vikas programme for artisans and craftsmen is also expected to strengthen the MSME sector. These are apparently because MSMEs are bringing about significant changes in their domains and setting benchmarks for quality and performance. MSMEs contribute 30 per cent to the country’s GDP, offer livelihood to 11 crore people and account for 40 per cent of the total exports. Significantly, there are now 1.64 croreregistered MSMEs, which are generating 10.73 crore employments.

This implies that the sector is on its way to becoming the country’s largest employment provider.Little wonder therefore that the Union Ministry of MSMEs is relentlessly working towards ensuring conducive environment for them. The ministry is working closely with other ministries, departments, state governments, industry bodies and other stakeholders to provide an enabling environment to the MSMEs such as access to credit, low cost of finance, equity infusion, technology upgrading, access to green technology, enhanced procurement, domestic and international market access among others.

The Centre is looking at the MSMEs to play a crucial role towards achieving ‘Atmanirbhar Bharat’ and establishing India as a $five trillion economy. MSMEs are the nurseries for entrepreneurs to make them globally competitive. In their bid to help them gain a foothold in the global value chain the central and state governments have launched several initiatives, certifications and ECLGS to not only strengthen MSMEs but also enhance their environmental consciousness. There is a fine balance between looking at sustainability and being sustainable, for MSMEs to be truly sustainable linkages between sustainability and profitability needs to be firmly established.One has to keep in mind that competition has gone global and there are no natural boundaries. Therefore, lowering the barriers to entry and encouraging start-ups will be critical. The digital revolution that is here to stay is already transforming the way entrepreneurs do business.

MSMEs, on their part, must adopt technology and gain expertise for the rapidly emerging marketplace. It is also important to build an efficient framework and infrastructure to empower MSMEs to grow. Digitisation is important for MSMEs to enhance efficiencies. However, in isolation they don’t serve any purpose unless the entities that are on the digitalisation path interact with each other digitally. It is not enough for the buyer and seller to interact digitally but each entity that is a part of the supply chain has to be on the same page and that requires a platform. Digital platforms remove the need for manual efforts for buyers and sellers on the platform making the entire process more efficient. It is ditto for a payment system.Just to give some figures, the B2B e-commerce business in China is $4.24 trillion while in the US it is $1.53 trillion. In India, it is $11 billion, clearly thanks to the impact of digitization, which, undoubtedly is the way forward.