MSMEs are the cornerstone of the Indian economy as it is the second largest employer after agriculture. So, it is crucial to building an ecosystem in the Indian economy where our industries can grow to become globally competitive. There are ample problems small-scale industries are facing, like, lower productivity, lack of capital, missed opportunities for innovations, etc., and due to this, it is difficult for MSMEs to grow on a global level.
IT Infrastructure: A Golden Opportunity for Government and MSMEs to Collaborate
MSMEs require cost-effective solutions for their operations. Cash-strap businesses can’t invest in the R&D of newer solutions and build IT infrastructure for their organizations. Though, on the other hand, due to the rise of Indian fintech, SaaS-based platforms like CredFlow are helping MSMEs to optimize their cash flow, and government intervention is necessary to build their infrastructure.
So, to compete on a global scale, their infrastructure must remain up to date, which is difficult because of the cash constraints.
The solution to this problem is a shared infrastructure model through which multiple MSMEs can share resources to grow their business. They don’t have to spend capital and utilize their saved resources more efficiently.
It can work on the public-private partnership model so that employment generation is manifold. Therefore, through a single scheme MSME sector can grow exponentially.
Shortage of Skilled Labour: A Critical Problem for Small Scale Industries
Skilled labor shortages are a big concern for the MSMEs — with shared IT infrastructure, we can reduce that dependence on MSMEs. Rather than recruiting and relying on the internal staff, they can have common resources saving them both bandwidth and reducing the burden on their financial capital.
Also, due to the nature of the MSMEs, their sole focus is to keep the business running. They do not have the liberty to expand into other ventures and skill their labor. So, without increasing their standards and operations to the global level, they can’t go into global markets.
MSMEs Hold the Potential for Global Competition
The biggest strength of MSMEs is that they are adaptable to changing situations. Through the uncertain times of the pandemic, MSMEs thrive because of their resilience. For instance, in the auto sector, MSMEs got success — when Maruti Suzuki entered the market, a large number of the MSMEs started manufacturing auto components. Nowadays, India is one of the biggest manufacturers of auto spare parts.
The reason that Indian MSMEs were able to prove their mettle in the auto sector because of two reasons:
- Global players were focusing on domestic production capacities to fulfill their demand, thus expanding the ecosystem of manufacturing in the Indian market. It aggregated many small-time manufacturers and helped in expanding operations.
- Along with that, it raised awareness regarding the standards to maintain and expedite the process of adoption of the new technologies.
So Indian MSMEs are resilient and adaptable to newer situations and can mend their business as per the demand and supply.
So, small-scale industries can go global, albeit given enough government support. If India Inc. wants to achieve a five trillion dollar economy, we need to develop our MSME sector. It is the second largest employee after the agricultural sector. Therefore, following these initiatives, we can build globally competitive MSMEs.