MSMEs overview & significance:
A developing nation like India needs contribution from each sector to have a sustainable economy that can cater to the rising demands of the ever-changing market scenario, the growing aspirations of its demography, and the unpredictable situation after the pandemic. The medium, small and micro enterprises in our country are undoubtedly major contributors to the GDP growth of our nation (around 29 % approx) and contribute to the overall growth of the socio-economic scenario. Apart from being a source of employment generation, this is also a sector that assists the entrepreneurship arena that is promising and prospering where young and talented ones are trying to make an impact. It is a great equalizer too as it helps in upgrading regional avenues due to the promotion of industrialization in tier II & III cities including remote areas. India currently has approximately 6.3 crore MSMEs out of which only about 30 odd lakhs have been registered.
Classification:
The Micro, Small, and Medium Enterprises (MSME) are classified into two classes i.e., Manufacturing Enterprises and Service Enterprises. The enterprises are further categorized based on investment in equipment and annual turnover. The recent changes in the definition of micro, small, and medium-sized enterprises (MSME) were made as a part of the Atmanirbhar Bharat Abhiyaan relief package and now the investment and turnover figures were changed to larger values so that there is broader coverage.
Pandemic & its impact on the MSME sector :
The pandemic that hit our lives in the year 2020 almost disrupted this sector majorly due to the below factors:
- A sudden decrease in the demand
- Severe liquidity crunch
- Non- accessibility of the market due to nationwide lockdowns/self isolation/containment zones thereby adversely affecting the supply chain networks
- Non-digitization of operations leading to the high cost of production
- Lack of proper credit and financing options to absorb the unforeseen risk
Though the negative impact of the pandemic on this unorganized sector was much less in FY 2021 as compared to FY 2020, still the loss was a major one and has changed the dynamics of this sector to a great extent.
The way forward:
To mitigate the downfall post-pandemic, Govt has released many measures like easing bank loans and allowing NFBCs (Non-Banking Financial Companies) to give credit to MSMEs facing acute financial trouble, working towards strengthening of the debt resolution system, etc.
India has come to realize that though unorganized, this sector has huge potential and it is high time for us to compete with world players so that we leverage more. But for this to happen, apart from dealing with the persistent issues that plague this sector like difficulty in getting credit, cumbersome paperwork and documentation process, lack of awareness about the legal protections and frameworks, dealing with a complex regulatory & licensing mechanism, negligible digitization of operations, etc., focus should shift towards developing the all-round infrastructure so that we can be competitive in the global market. For this to happen there is a need to develop MSMEs as brands that the potential customers identify with and there must be a proper marketing strategy to create brand recognition and thereby leading to brand recall.
The following five ways can help in this regard:
- Doing away with operational lacunas and focusing on quality offering
- Seamless usage of E-Commerce and strengthening the supply chain management
- Delivering & Creating customer recall
- Focus on R & D and skill enhancement
- Building brand image
- Expanding the horizons from local to global
Make Sustain Market Enhance – Time to Brand yourself & go global.
India has an advantage due to its manpower and the very resilient mindset to tide over any adversity. This can surely help in taking the MSMEs a step further. In order to achieve this there is a need to make quality offering a priority, adapt and be aggressive to changing scenarios to sustain the business, use technology to have a digital presence and market to the potential buyers, and most importantly be unique and differentiate oneself to create the world-class brand so that there is an impact. Most of the successful and large players like the Amazon, Flipkart, Walmart started out as small players but with effective positioning, they have become trustworthy brands. Building a brand is about being better than others by promising to offer quality products /services, differentiating and having a unique perception in the mind of the customer, and making continuous efforts to create customer satisfaction. The mantra for Indian players should be Make, Sustain, Market & Enhance ( Making quality products & services, Sustain the demand & supply in every situation, Market to build awareness, Enhance and create a brand ).
A few ways which can help build a brand are as below:
- Increasing digital literacy ,integrating digital payment gateways & effective use of Social Media space.
- Using SEO techniques to tap the potential buyers
- E- commerce to reach wider markets
- Creating awareness and building online marketing campaigns apart from offline advertising
- Taking help of the Artificial Intelligence & positively influencing the customer preferences
Of course, the journey is not easy. But as the saying goes, where there is a will, there ought to be a way! So, if there is a collective effort, will power and government support in terms of providing an environment where small players prosper and medium players are protected from large players by policy fixation, hassle-free licensing & regulations, and financial impetus, the day is not far when India will lead the world and be a leader in the MSME sector worldwide.
References:
2) https://www.indiafilings.com/learn/revised-criteria-and-definition-of-msme/
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