Indian MSMEs need to embrace technology to enhance their global competitiveness: P C Sarangi, MoS, MSME

While the Government is working on measures to create a level-playing field for the Indian MSMEs, these players will have to embrace technology and focus on value addition to enhance competitiveness in the global arena, Pratap Chandra Sarangi, union minister of state, Ministry of Micro Small and Medium Enterprises said at a virtual webinar on modernization of MSMEs, organized by The Associated Chambers of Commerce of India (ASSOCHAM).

For the MSMEs sector to thrive in the international market there is a need to focus on three important factors — reducing capital cost, power cost and logistic cost — to become competitive in the international market, Sarangi said. “We are working on a policy to strengthen the export business. The government is also working on a policy to increase indigenous production of products that are being imported,” the minister said.

According to Sarangi, the time has come when the creative entrepreneurs belonging to their specific work areas come forward with fresh ideas on improving designs, harnessing businesses, and reducing costs of operation. “Entrepreneurs play a vital role in pushing enterprises ahead with their progressive efforts and collective thought process. Through their efforts, small and medium companies will increase production without increasing their costs, thus giving rise to an augmented economy,” he said.

The Ministry of MSME is taking steps towards making these enterprises global and improve the overall business environment, by making it more conducive and transparent for all stakeholders. “Private sector engagements in various bottlenecks of the value chain and supply chain system are critical for the success of various policies announced by the government,” he said.

MSME Promo For Entrepreneurs

With the government increasing opportunities for local MSMEs and reducing dependence on imports, Indian MSMEs will be able to scale up operations and gain a higher market share across the various sectors, Sarangi said.

Vineet Agarwal, president, ASSOCHAM and managing director, Transport Corporation of India Limited said the Covid19 pandemic has had a very disproportionate impact on the MSME sector in terms of the demand coming down, the price of raw material going up and the small businesses not getting their money on time.

“Sectors like the hospitality and tourism getting impacted even more. The government needs to set up measures like an additional 20 per cent working capital limit to help out these small business enterprises,” he said.

Agarwal further mentioned that without the contribution of the MSME sector, India’s journey to becoming a $5 trillion economy won’t be an easy one. “Even the MSMEs need to have a competitive mindset and use their resources wisely. There is a need to use digital technology to access global opportunities,” he said.

Deepak Sood, secretary-general ASSOCHAM said that the Government of India has undertaken several path-breaking initiatives to support MSMEs recently. He stated that these include putting in place financial support mechanism through Fund of Funds, broadening the definition of MSMEs, introducing an IT-based champions platform to provide solutions to issues of MSMEs and many more.

“To ensure that the current digitization wave is leveraged to the fullest, India will have to invest significantly in upgrading skills—skill, reskill and upskill. Research indicates that MSMEs can increase revenues by 34% with the help of digital tools, especially in tier-2 and tier-3 Indian cities,” he said. Promoting the digitalization of MSMEs can help address a number of the economic challenges, which have been exacerbated by the COVID-19 crisis.

“However, the process of adopting new digital approaches would also bring in risks, such as cyber-security and data privacy concerns; online misinformation; persistent digital divide and infrastructure-related issues, etc. Hence, it is the need of the hour to support MSMEs’ digitalization efforts by the policymakers to focus on interventions that allow MSMEs to reap the benefits of the digital world while overcoming the challenges of digitalization,” Sood said.