Digitisation: The essential guide to serving the Indian MSME

The Micro, Small, and Medium Enterprises (MSMEs) form the backbone of India's economy, contributing 30% to its GDP, employing over 110 million people

Omnipresence of digitisation has transformed the way we interact, learn, work, and even live. From the moment we wake up to the sound of digital alarm clocks to working round the clock digitally to not having to wait for the sabzi vale bhaiya and buying vegetables and groceries online to attending weddings on zoom call, to education which was once confined to physical classrooms now taking flight on digital platforms, you must get the drift by now. It is amazing how effortlessly we now navigate the vast amount of information on the Internet and enjoy limitless knowledge at our fingertips.  

As the world becomes more connected, especially post-pandemic, digital adoption could change the way businesses operate, opening new avenues for their growth, be it payments, lending, education, insurance, or others. One of the main reasons why it is important for Indian MSMEs to start digitising their operations is its ability to increase their overall productivity. Organisations have faced many challenges in optimising their resources, often resulting in inefficiencies and increased costs.

The Micro, Small, and Medium Enterprises (MSMEs) form the backbone of India’s economy, contributing 30% to its GDP, employing over 110 million people – which makes them the second largest employment providers after agriculture and contributing 40% to the exports in the country. By using digital technology to manage their day-to-day operations such as inventory, supply chain and finances, MSMEs can streamline their operations, reduce waste, and speed up production. This allows them to save money and be more competitive.  

Innovation stands as a crucial catalyst for growth, competitiveness and weathering unforeseen storms. In fact, as seen during the Covid-19 pandemic when lockdowns and movement restrictions were imposed, businesses that had already embraced digitisation had a better chance of survival compared to those who had still not embraced that path. By harnessing emerging technologies, these enterprises can develop groundbreaking products and services, keeping pace with rapidly evolving customer demands and play a crucial role in fostering a culture of innovation among Indian MSMEs. 

Another significant advantage of digitisation is its ability to promote financial inclusion among MSMEs. Access to formal credit has been a long-standing issue for many small businesses. Today there are some amazing digital lending platforms working with the sole mission of uplifting this underserved segment, offering innovative financial solutions, which facilitate easier access to credit for MSMEs.

This access to capital breaks MSMEs free from the problem of not being able to get funds from traditional channels and moneylenders which can fuel their growth, support their expansion plans, and empower them to take advantage of new market opportunities. 

Also, from what I have seen over the years, one of the biggest challenges faced by MSMEs in India is limited access to markets. Traditionally, these enterprises have been confined to regional boundaries, hindering their growth potential. However, with the rise of internet penetration and the increased use of smartphones, digitisation acts as a bridge, connecting MSMEs with national and international markets.

Leveraging e-commerce platforms and online marketplaces, they can promote their products and services worldwide, and establish themselves as global players. This opens a plethora of opportunities for them to thrive and contribute to the country’s economic growth. 

Moreover, digitisation promotes transparency and accountability in business operations. By using digital record-keeping and data analytics, MSMEs can track and analyse their performance in real-time. This transparency builds trust among customers, suppliers, and investors, fostering long-lasting business relationships.

Harshvardhan Lunia
Founder & CEO,

However, as we embrace digitisation, we must not overlook the challenges it brings. Cybersecurity and data privacy concerns are some of the issues that require attention. It is essential that MSMEs are equipped with the knowledge and resources to tackle these challenges effectively. 

In conclusion, the prospects of digitisation for Indian MSMEs are incredibly promising. By embracing digitisation, these enterprises can experience enhanced efficiency, stimulate innovation, promote financial inclusion, and become more competitive on a global scale.

It is crucial for our nation to unite in providing unwavering support and facilitation for the digital transformation of MSMEs through well-designed policy initiatives, skill development programs, and financial incentives. In doing so, we unlock their untapped potential and pave the way for a brighter, digitally empowered future for the Indian economy.  

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of ET Edge Insights, its management, or its members

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