A survey by the Small Industries Development Bank of India (SIDBI) found that 67 percent of respondents to MSMEs indicated temporary closures for three months or more during COVID in fiscal year 2020-21. Over half of MSMEs that responded experienced a revenue drop of greater than 25% in 2020-21. A total of 66 percent reported that profitability was affected by stable fixed expenses, and revenue drops.
In the past 2 years, MSMEs were encouraged to adopt digital methods of working and conducting business. Small businesses have been impacted by a new wave of innovation and digitization. Many of them have upgraded their technology over the past year. They now offer online shopping, listing their products, and scaling their back-end systems.
Significant disruptions were caused by the pandemic in the MSME sector, especially in the manufacturing sector. Although official data are still in the awaiting stages, surveys conducted during the pandemic revealed that this sector was experiencing significant distress.
Going digital is not the only option for MSMEs
Small businesses need to accelerate digital technology adoption in order to thrive in today’s highly competitive business environment. This will allow them to improve their business performance, employee productivity, as well as performance.
According to Mr, the CEO and co-founder of Synersoft Technology. Vishal Shah believes that the world is going through a digital revolution and MSMEs should embrace this technology advancement to embark on their digital journey.
Manish Gopta, Dell Technologies, says that MSMEs can derive useful insights from business-critical data and manage operations efficiently while optimizing the workplace’s finances by making smart IT investments. Cost efficiency and time efficiency are crucial to the success of a business in its early stages.
India’s MSME Sector Growth
Let’s discuss MSME Growth in India.
MSMEs (smaller producers, retailers and kiranas) are the backbone Indian economy. They account for almost 30 percent of Gross Domestic Product, 40% of the staff and 40% of total exports. India’s MSME sector growth rate is approximately 10% in 2022.
Despite rapid adoption of technology in other sectors of the economy, the MSME industry has been slow to adopt technology and digitization for its growth. The government’s proposals for the MSME environment, like the ECLGS, were primarily focused on funding problems. Many technology-driven startups have stepped in to help MSMEs integrate technology into their operations. This includes logistical issues, production management, cash flow, credit and payments, compliance and accounting, as well as financial and legal issues.
B2B eCommerce platforms have allowed MSMEs to access trusted and reliant buyers and sellers to conduct business activity, cash flow, discounting bills and other critical services. This has enabled India’s 63 million+ small- and medium-sized businesses to concentrate on scaling up and growing.
This is just a beginning. However, it is only the tip iceberg when it comes to using technology to simplify small business operations.
Areas that are expected to grow in India’s MSME Sectors
These are the areas that this sector can expect an accelerated digitization in 2022.
Digital Inventory Management
MSMEs will use inventory surveillance systems and other methods to digitally track and monitor authentic inventory. They can also improve visibility through data tracking and collect information as goods move through the supply chains.
These systems can be used by businesses to monitor how many products are in stock, the locations of products, and how each SKU is performing in real time. This will enable them to make more efficient decisions regarding inventory allocation, stocking, and other issues.
A decision on a loan for small businesses is usually made by traditional banks within 3 to 5 weeks. The time it takes to get credit for MSMEs will be significantly reduced by digitization and B2B platforms such as Solv, which combine banking services from traditional banks as well as those provided by new-age fintech lenders.
Small businesses can leverage alternative credit ratings methods to get capital investment and cash advances faster, which will allow them to grow.
Improve efficiency by using AI and machine learning
MSMEs will accelerate the adoption of artificial intelligence-powered, digital platforms for logistics and supply chain efficiency. This will improve warehouse operations, smarter transport, inventory upgrades, route optimization and delivery.
AI-driven optimization techniques will use data collected at each stage to increase efficiency and access value throughout the chain. AI can also be combined with NLP and machine-learning techniques to ensure quality control and assurance.
Chatbots for customer service will be more frequent and used to collect feedback and data, understand customer expectations and patterns of purchase, modify products or services according to customer demand, and improve customer satisfaction.
The COVID-19 epidemic highlighted the dangers associated with doing business only through physical storesfronts. Businesses of all sizes are expected to use digital, online storefronts in the next year to share product catalogues, record customer requests and take cashless payments.
This will provide small and medium businesses with a solid foundation to survive and persevere in the face future COVID-19-induced locksdowns. It will also allow them to reach more people without regard to their geographical location, make it easier to do business and increase customer satisfaction.
Acceptance of digitization will enable MSMEs to grow faster with digital payment, which will reduce credit strain. One of the positive steps towards digitizing the supply chain is digital invoice acceptance. These digital tools allow MSMEs to have easy access to Financial Accounting, Stock Management and Management Information Systems.