MSMEs Witness 68% Growth In Business Post Digital Tech Adoption: Report

As the sector continues to face debt and delayed payments crisis, Indian micro, small and medium enterprises (MSMEs) have witnessed about 68 per cent growth In business after adopting digital tech, according to the ‘MSME Digital Index 2024’ survey released by PayNearby.

The study revealed that 43 per cent of MSMEs prefer UPI and 38 per cent prefer Aadhaar Banking for last-mile banking services. The report emphasised that 68 per cent of MSMEs acknowledged the growth and beneficial impact of adopting digital technology on their businesses and personal lives.

With the adoption of technology in recent years the MSME sector in India is experiencing significant growth. According to the report by PayNearby over 65 per cent of MSMEs utilise some form of digital technology for their daily operations.

“The MSME sector is pivotal to our economy, and their adoption of digital technologies is crucial for India's growth. The MSME Digital Index 2024 showcases significant progress in technology adoption while highlighting persistent challenges. We believe that MSMEs should be supported in their digital transformation journey and ensure that technology's benefits reach every corner,” said Anand Kumar Bajaj, Founder, MD and CEO, PayNearby.

Bajaj added that by leveraging artificial intelligence (AI), augmented reality (AR) and machine learning (ML), MSMEs in rural India can thrive in a digital-first economy. We must foster an inclusive ecosystem that enhances skills and removes barriers, enabling all businesses to embrace digitalisation. Together, we must envision a future of limitless opportunities, driving economic growth and social upliftment in the real Bharat.

Also, about 31 per cent of MSMEs indicated that it has enhanced business growth by improving operational efficiency, while 27 per cent reported increased sales and income due to technology adoption. As for the main challenges in using technology for business operations, 36 per cent cited resistance to adopting new technology, and 18 per cent struggled with the high costs associated with its implementation.

WhatsApp and WhatsApp Business were collectively the most widely used messaging apps, with a usage rate of 97 per cent. According to the survey, 75 per cent of small business owners aged 18-30 were the most digitally adept, closely followed by the age group of 31-40 years.

Smartphones were preferred by 70 per cent of users, its widespread adoption highlighting the internet's crucial role in bridging infrastructure gaps and promoting tech inclusion among MSMEs at the grassroots level. The Digital India mission and BharatNet initiative have accelerated internet penetration in rural areas, making it affordable and bridging the digital divide, it added.

The report stated that among all tech-savvy MSMEs, a majority of 29 per cent used accounting software, followed by POS software and Customer Relationship Management (CRM) software at 17 per cent and 14 per cent respectively, to manage their business operations. Meanwhile, 6 per cent relied on manual methods. This highlights the necessity of fostering a thriving tech ecosystem to empower MSMEs.