MSMEs: India's Growth Engine and Path to Economic Transformation

India has the largest MSME base after China with over 64 million traders, manufacturers and retailers. These small business communities are pivotal in keeping India on the trajectory of becoming one of the world’s fastest-growing economies. They contribute 2% of the nation's gross domestic product (GDP), 45% of industrial output and around 40% of exports. In other words —MSMEs in India are the nation’s growth engine. However, MSMEs contribution could be beyond one’s comprehension.

This article highlights MSME impact on the Indian economy and social transformation. Moreover, it’ll be interesting to see how this industry leverages new-age technology to further amplify its growth and impact.

“More job opportunities equals more development!”

MSMEs are the backbone of the Indian economy, fueling growth and driving social transformation. Next to agriculture, MSMEs in

dustry employs the most people, which is keeping the fuel burning in the houses of around 11.10 cr people in India. Moreover, the sector’s employment potential at minimal capital cost is its key advantage.

MSMEs are widely scattered around the country and produce a diverse variety of goods and services to meet the demands of regional, national and international value chains as well as local and worldwide markets. That being said, they promote inclusive growth enabling balanced regional development and entrepreneurship.

Despite this, MSMEs are facing several issues in India, and the trouble storm is nowhere near the end until it's properly addressed. Let’s address the problems faced by MSMEs in India:

1. Issues of employee’s improvement: There are many small and medium-sized enterprises that face challenges in providing ongoing training and development for their employees. Absence of skilled personnel negatively impacts innovation and productivity. This could help the employees to be more adaptive with new market demands.
2. Infrastructure Deficiencies: The issue of poor infrastructure such as power outages, and weak transportation system has a negative effect on productivity and competitiveness. Improved infrastructure will reduce costs, improve operational efficiency, thereby making MSMEs more competitive in the overall market place.
3. Overall management: Most MSMEs lack effective management systems leading to inefficient utilisation of resources as well as lower profits. Empowering staff through lean manufacturing, total quality management among others can help streamline operations hence improving performance.
4. Difficulty to adopt technology: Costs of new technologies are unaffordable to many in this sector hence restraining its uptake. By embracing digital tools and technology, they can promote innovations and increase customer engagements while reducing operating cost.

How technology adoption is the path to overcoming challenges in MSME Sector?

Adopting technology can change everything for small and medium-sized enterprises (SMES) by directly solving many of these challenges. MSMEs can cut costs, increase productivity, and simplify processes through the use of digital tools and advanced technologies. Technological adoption in MSMEs can assist workers to receive better training and upskilling by generating virtual learning environments and internet based platforms! Improved management software will enhance overall efficiency through optimization of financial planning, inventory management, resource allocation among others. Also, it is possible that e-commerce as well as digital marketing may reduce the impact resulting from shortcomings in its physical infrastructure hence a digital infrastructure enables remote work. Through opening new markets and economic prospects while also supporting MSMEs to stay competitive, adopting technology promotes resilience and sustainable development.

Mechanisation and Automation in MSMEs

MSMEs can benefit from digitization in multiple ways. Businesses may optimise operations and free up critical time and resources for more strategic endeavours by automating repetitive chores. Automation greatly reduces the possibility of human error, increasing accuracy and dependability. This translates to less anxiety over errors and more seamless operations.

Furthermore, mechanisation of manufacturing can enable it to attain its full potential, leading to more balanced economic growth and improved job prospects. Automation aims to make work simpler, quicker, and more effective—not to replace humans with machines. As a result, MSMEs may prosper in a changing market, innovate, and maintain their competitiveness.

In other words of Eric Pearson (CIO, International Hotel Group) –

“It’s no longer the big beating the small, but the fast beating the slow.”?and adapting technology to expand or elevate your business processes is the wisest decision one can ever make.

One such company which is working to elevate MSMEs productivity and efficiency is SelfTech.in. Visit us to know more.