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<\/p>\nMSMEs are the backbone of the Indian economy. With more than 6.3 crore micro, small and medium-sized enterprises (MSMEs) contributing nearly 29% to the country\u2019s GDP, there is an immense scope to scale up this segment.<\/p>\n
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A key driver to this anticipated growth is the Atmanirbhar Bharat Abhiyan which aims at creating a self-sufficient India.\u00a0\u00a0The program is built on five major pillars:\u00a0<\/span><\/p>\n MSMEs in India play an important role in reducing regional imbalances. They ensure a more equitable distribution of national income and wealth by offering substantial job opportunities at a lower capital cost than major businesses. MSMEs are known to contribute to the industrialization of rural and backward areas.\u00a0<\/span><\/p>\n Unlike other economies though, the Indian MSME segment finds it harder to scale up. What economists call \u2018the missing middle\u2019 has become a perpetual puzzle difficult to solve. Whether in the manufacturing sector or other verticals, the \u2018missing middle\u2019 is ever-present. A natural progression is for enterprises to be micro-sized, grow to small entities and scale up to become mid-sized and later large companies. In India, a peculiar situation arises. Companies start small, stay small and fail to scale up. This is the \u2018<\/span>missing middle<\/a><\/span>\u2019.\u00a0 \u00a0 \u00a0 \u00a0\u00a0<\/span><\/p>\n Anemic growth and lack of employment opportunities are just some of the challenges this segment confronts as it fails to scale.\u00a0<\/span>Lack of access to finance and technical know-how, inadequate skills (both operational and technical), poor infrastructure facilities, high production costs and socio-economic constraints are just some of the challenges that MSMEs face in taking their businesses to the next level.<\/span><\/p>\n To compete globally, MSMEs need a\u00a0<\/span>nine-fold increase<\/a><\/span>\u00a0in digitally skilled workers by 2025. Such competencies include data analysis, cross-network collaboration, on-demand learning, and real-time response to operational change.\u00a0<\/span><\/p>\n While the answer partly lies in providing MSMEs with easy, equitable access to credit to boost their manufacturing facilities, the right policies, a supportive ecosystem and pivoting on technology will be key to helping this sector grow.<\/span><\/p>\n The Atmanirbhar Bharat Abhiyaan was a response of the Indian government to counter the pandemic\u2019s negative impact on the MSME sector. The MSME sector has been given a significant allocation and priority in implementing the measures that will revitalize the economy. Various announcements have been made under the package to aid the MSME sector immediately.\u00a0<\/span><\/p>\n The Government of India,\u00a0for example, has lately embraced a clustering and networking approach to assist MSMEs in improving their competitiveness during difficult times. The government is also working to address the needs of the various industries by offering various level courses through its training institutes distributed across the country.<\/span><\/p>\n The reason for the government to stress on the importance of MSMEs can be understood by the contribution the MSMEs can provide to achieve the dream of Atmanirbhar Bharat. Here are the\u00a0five main ways\u00a0<\/span><\/span>in which MSMEs are playing a crucial role in Atmanirbhar Bharat:<\/span><\/p>\n The United Nations commemorates 27th<\/sup>\u00a0June as World MSME day. The United Nations understands the inclusive growth promoted by MSMEs and is taking various steps to help the MSMEs get back to business after the pandemic. They have recognized that the services sector is more impacted because of the pandemic, and they are putting their efforts into the services sector. The services sector is known to provide employment to temporary workers and to promote inclusivity. MSMEs are being helped by the Indian government and United Nations as well.\u00a0<\/span><\/p>\n If India is to become a $5 Trillion economy by 2025, the\u00a0<\/span>share of MSME<\/a><\/span>\u00a0is expected to reach 50%. Thus, MSMEs will contribute to growth in the future. Also, informal employment in India is very high. With the formalization of the Indian economy and high growth in the MSME sector, inclusive growth can become a reality, with jobs being created even in the remote areas of India. If jobs are provided to remote areas, India can truly achieve the dream of an Atmanirbhar Bharat.\u00a0<\/span><\/p>\n Indian SMEs face significant obstacles in the globalization and liberalization period despite all significant efforts made by the government. The country can become Atmanirbhar if MSMEs can scale up to compete with global peers and participate in international market opportunities. It\u2019s possible to make this a reality if MSMEs are more vigorous in adopting technology to get a competitive advantage.\u00a0<\/span><\/p>\n Indian MSMEs are starting to integrate new and innovative information and communication technologies on a big scale, such as Software as a Service (SaaS) and Infrastructure as a Service (IaaS). MSMEs in India may hire external consultants or take other actions regularly.\u00a0<\/span><\/p>\n Technology transfer, such as vertical technology transfer or horizontal technology transfer, is another option to be considered by the Indian MSMEs.\u00a0<\/span><\/p>\n Despite the obvious benefits that technology can provide micro, small, and medium-sized enterprises, this segment has not been as aggressive in undertaking digital transformation. Digital proficiency is the need of the hour if this sector is to survive disruptions and build business resiliency. Digitally connected MSMEs can get better access to the market and take advantage of a borderless marketplace.\u00a0<\/span><\/p>\n For MSMEs to compete globally, programs such as 麻豆原创\u2019s\u00a0<\/span>Global Bharat<\/a><\/span>\u00a0initiative can be of great help. Besides enabling digital skilling for the workforce, this program also provides access to B2B marketplace. Growing businesses need to have an enterprise resource planning (ERP) system in place since it helps bring in efficiency and enhance productivity. From automating routine business processes to reducing human intervention to integrating key business processes, ERP is extremely beneficial to MSMEs.\u00a0<\/span><\/p>\n Some of the benefits of having an ERP system include the ability to minimize errors due to automation, see real-time inventory and gain insight from well-structured data.\u00a0\u00a0A cloud-based ERP provides flexibility and real-time analytics. Having real-time analytics can help faster decision-making based on up-to-date, real-time information. As an MSME, having access to real-time information will help the decision-making process while optimizing resources and costs.\u00a0<\/span><\/p>\n MSMEs are beginning to realize the advantages provided by ERP systems. India is adopting ERP solutions<\/a> at a faster clip than the rest of the Asia Pacific region. According to a\u00a0<\/span>NASSCOM<\/a><\/span>\u00a0study, SMEs can contribute up to 30% of the cloud market. The study showed that 60% of the SMEs are already using cloud, although half are at the early stage of adoption. Of course, adopting cloud has helped SMBs reduce operational costs while increasing productivity.<\/span><\/p>\n\n
The Missing Middle and Challenges in Scaling Up<\/span><\/strong><\/h3>\n
Enabling Policies for the MSMEs Sector<\/span><\/strong><\/h3>\n
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<\/p>\nTechnology can unlock the next phase of growth<\/span><\/strong><\/h3>\n