Going Beyond Another MSME Day. We Can Do Better
As we commemorate another year of MSME Day, it is crucial to reflect on the challenges that continue to impede the full realisation of the Indian MSME sector's immense potential. The value addition and economic contribution of MSME & SME entrepreneurs cannot be missed, for its resilience and ability to constantly reinvent themselves. The sector is an important employer too. But what’s holding India from leveraging the potential of its MSME?
Despite the hype about MSME growth stability, and occasional acknowledgement of their importance to the economy, MSMEs in India still face significant obstacles in scaling productivity, output, and unit pricing. However, we can draw lessons from global MSME successes and identify key factors that can drive the transformation of this sector. By focusing on Ambition, Business model, Capital & Credit, Digitalisation, Exports, and Future-proofing, Indian MSMEs can unlock their true potential and thrive in the competitive global market.
Ambition: It is essential for MSMEs to dream big and foster an ambitious mindset. Aspiration is the first step towards growth and innovation. By setting tall goals and constantly challenging themselves, MSMEs can push boundaries and achieve remarkable success. This will be on the strength of national and state-level policies that would provide confidence to the sector.
Business model: MSMEs need to rethink and revamp their business models to stay relevant and competitive. In the run-up to global markets, the ability to scale profitably will be tested. Embracing innovation and adopting modern practices such as lean manufacturing, automation, and process optimization can enhance productivity and streamline operations. This is where the role of SROs will come in handy.
Capital and Credit: Access to adequate capital and credit remains a pressing concern for many MSMEs. To overcome this challenge, policymakers and financial institutions must work hand in hand to develop tailored financing solutions, simplify loan procedures, and promote alternative funding mechanisms like venture capital and crowdfunding. But this has been a challenge despite the large potential. Having lower double-digit credit growth is not a true showcase of the sector’s potential.
Digitalisation: The digital revolution has opened up new avenues for MSMEs to scale their operations and reach wider markets. Embracing technology, such as cloud computing, e-commerce platforms, and data analytics, can empower MSMEs to streamline processes, reduce costs, and enhance their competitiveness. Again, the industry associations and SROs can work in building these skill sets to the sector.
Exports: Expanding beyond domestic boundaries is crucial for MSMEs to diversify their customer base and tap into global markets. Governments and industry bodies should provide the necessary support, including trade facilitation measures, market access assistance, and export promotion schemes, to enable MSMEs to become active players in the global arena.
Future-proofing: Adapting to changing times and anticipating future trends is vital for the long-term sustainability of MSMEs. By investing in research and development, fostering a culture of innovation, and embracing emerging technologies, MSMEs can future-proof their businesses and stay ahead of the curve. Here is where using the power of social media will be useful, to disseminate information for the sectoral stakeholders for their developmental agenda.
Drawing insights from successful MSME stories around the world, including countries like Germany, South Korea, China and Taiwan, we find common themes of ambition, innovation, access to finance, digitalisation, global outreach, and a forward-looking approach. Implementing these lessons can help Indian MSMEs overcome their existing challenges and unlock their true potential.
In today's rapidly evolving world, where competition is fierce and technological advancements drive change at an unprecedented pace, the traditional concept of "Jugaad" alone will no longer suffice for scaling MSMEs. Jugaad, often associated with frugal innovation and resourcefulness, has played a significant role in the growth of many Indian MSMEs. However, to truly excel and compete globally, a shift towards a constant innovation mindset is imperative. While Jugaad has its merits in finding quick solutions with limited resources, it often focuses on short-term fixes rather than long-term sustainable growth. To scale MSMEs successfully, a deeper emphasis on innovation as a mindset is required. This mindset entails fostering a culture that encourages continuous improvement, embraces experimentation, and seeks out opportunities for breakthrough ideas.
Constant innovation empowers MSMEs to adapt to changing market dynamics, anticipate customer needs, and proactively address challenges. It encourages them to think beyond the immediate constraints and envision transformative solutions. Rather than relying solely on frugal fixes, an innovation mindset drives MSMEs to seek out novel approaches, explore emerging technologies, and collaborate with partners across various sectors.
To cultivate an innovation mindset within the MSME sector, several key elements should be considered. First and foremost, education and training programs should be designed to promote creative thinking, problem-solving skills, and entrepreneurial mindset from an early stage. Encouraging collaboration and knowledge sharing among MSMEs, academic institutions, research organisations, and larger corporations can also foster a culture of innovation.
Moreover, providing access to relevant resources, including funding, technology, and infrastructure, can significantly support MSMEs in their innovation journey. Governments, financial institutions, and industry bodies must collaborate to create an enabling environment that facilitates innovation-driven growth. This can be achieved through policies that incentivise research and development, promote intellectual property rights, and establish innovation hubs and incubators.
In addition, fostering strong industry-academia linkages can bridge the gap between theoretical knowledge and practical application. Collaboration between MSMEs and universities can lead to valuable research, technology transfer, and a talent pipeline equipped with cutting-edge skills. Furthermore, MSMEs should actively seek partnerships with larger corporations and startups to leverage their expertise, market access, and resources.
By embracing innovation as a mindset, MSMEs can go beyond Jugaad and embark on a path of sustainable growth and global competitiveness. It requires a commitment to continuous learning, adaptability, and a willingness to challenge the status quo. With a focus on constant innovation, Indian MSMEs can unlock their true potential, drive economic growth, and become key players in the global marketplace. We should recognise and respect the significant contributions made by MSMEs to the Indian economy while acknowledging the work that still lies ahead.
