How Technology Can Empower the Indian MSME Landscape

18 Mar 2023
4 min read

Post Highlight

Almost all sectors of India are undergoing a significant transformation thanks to digital and new-age-technological initiatives taken by the Government of India and Various Industrial Bodies. Implementation of technology in businesses acts as a game-changer for the MSME's in many ways. Implementation of data analytics, big data transformation, system-driven operations, digital platforms, and automation of supply chain processes by means of artificial intelligence and machine learning makes Ease-Of-Doing-Business a possibility with high productivity and profitability.

The potential benefits of information technology to Micro, Small, and Medium Enterprises (MSMEs) are widely publicised. It has the potential to improve MSMEs productivity, lower costs, and broaden their market reach both domestically and internationally. Because the MSME sector is so vital to the nation's economy, it benefits individual MSMEs collectively, resulting in good outcomes such as job creation, revenue generation, and overall company competitiveness. In this blog post, we will explore How Technology is Empowering the Indian MSME Landscape.


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Micro, Small, and Medium Enterprises What are MSMEs? in India that are playing a pivotal role in generating employment opportunities at lower capital cost, reducing regional imbalances, and promoting industrialization in rural areas.

Almost all sectors of India are undergoing a significant transformation thanks to digital initiatives brought about by new-age technologies such as artificial intelligence, data analytics, and machine learning.

Technology has had a significant impact on all aspects of society, including the economy, businesses, and industries. The global economy is undergoing significant transformations, with technology playing an important role. Technology has a major impact on most industries and all aspects of the economy, while companies and enterprises continue to develop dramatically. Application of these

Technologies are changing the rules of business, resulting in fundamental changes in businesses. Organizations today cannot exist without the assistance of technology, which has a substantial impact on the operations of Micro Small and Medium scale Business.

How Technology Can Empower the Indian MSME Landscape

It is said to be necessary for the survival and growth of all economies. MSMEs are attracting attention in industrialised, developing, and transition countries. It is widely acknowledged that MSMEs play an important role in the regeneration and development of national economies in many nations, particularly in India. It promotes MSME development and the role that the MSME sector can play in supporting economic and social development by offering job opportunities. The various factors that influence technological development in MSMEs, such as the role of the entrepreneur, government policies,  organizational culture, and technological infrastructure capabilities, should be investigated further, and various steps should be taken to improve the state of technology in MSMEs.

MSME Definition  

MSME's are the engines of economic growth in any country. They are an important source of jobs in a country, develop an entrepreneurial spirit, and are essential for fostering competitiveness and employment. Micro, Small, and Medium Enterprises (MSME) are defined by the Micro, Small, and Medium Enterprises Development (MSMED) Act of 2006.

However, under the the Aatmanirbhar Bharat Abhiyan (ABA), the Ministry of Micro, Small, and Medium Enterprises recently revised MSME classification by inserting a composite criterion for both investment in plant and machinery and annual turnover of enterprises in its notice dated June 1, 2020. Furthermore, the distinction between the manufacturing and service sectors in the previous MSME definition has been removed. This removal will result in sector equality.

Classification Of MSMEs

Manufacturing Enterprises and Enterprises rendering Services

Micro -Investment in P&M/Equipment not more than INR 1 crore and Annual Turnover not more than INR 5 crores.

Small- Investment in P&M/Equipment not more than INR 10 crores and Annual Turnover not more than INR 50 crores.

Medium- Investment in P&M/Equipment not more than INR 50 crores & Annual Turnover not more than INR 250 crores

Micro, Small and Medium Enterprises in India

India has 22.63 Million MSMEs which accounted for 48% of India’s manufacturing output of more than 13.7 Million metric tonnes. MSMEs are organized into small units with minimum capital requirements and minimal skills. Micro-scale units have less than 10 workers, with around half of these units having less than three workers. Medium-scale units have more than 10 workers, and the average worker strength is between 20 and 40 workers.

The biggest number of MSMEs have less than 20 employees, and the average worker strength in these units is less than 20. Of the total, over 11.6 Million units were engaged in manufacturing, while 5.6 Million units were engaged in trade.

The Future of the Indian MSME Landscape

The changing dynamics of the digital economy and the movement towards cashless transactions present an opportunity for large corporate houses and larger financial institutions to leverage MSMEs to increase their earning opportunities through new distribution channels

A recent report by HDFC Ergo (About Ergo Group) indicates that a market of 10.7 Million MSMEs is on the verge of transformation as the shift to the digital economy has largely benefited medium enterprises (MSMEs) and SMEs.The good news is that MSMEs also understand that technology will provide them with new options to secure funding and ensure a better business growth trajectory.

Also Read: How To Combine Your Marketing Techniques For Industry Ownership

Let's Explore How Technology is Empowering the Indian MSME Landscape...

The changing nature of technology adoption has seen the opportunity of utilizing technology effectively in the entrepreneurial ecosystem. Today, a small enterprise needs a computer, a cell phone, a printer, a scanner, a videographer, a reporter, and a carpenter to run an organization.

Even though they are running an organization, they are probably never sitting with the same group of people. Nowadays, they are multi-location and multi-city, and the number of employees in an organization has increased by a thousand times. They are moving on to software applications that use apps to share work, make decisions, handle time-bound processes, and manage cash flow. In a way, the whole software-driven organization is becoming a technology-enabled organization.

How Artificial Intelligence is Changing the Industry

As per a McKinsey & Company Report, using data and analytics to boost productivity, add value and create a new customer experience is the new focus area for Indian SMEs. The report says that a single company can increase the value of its customer relationship by 40 percent by applying advanced data analytics to predictive analytics.

This report also states that an organization with annual revenue of $300 Million can increase the value of its customer relationship by a whopping $2 Million through data and analytics. The Government of India GOI has formulated the MSME Policy (MSME & Startups Forum- Bharat) to enable the growth of MSMEs, which are heavily dependent on cash. Atmanirbhar Bharat which translates to 'self-reliant India', is driven by combined efforts of various MSMEs and popularized by the Prime Minister of India Narendra Modi, and the Government of India in relation to the inclusive growth and economic development in the country.

How is Technology investment driving MSME Sector in India?

Implementation of technology in business acts as a game-changer for the MSME's in many ways. Data analytics, big data transformation, system-driven operations, digital platforms, and automation of supply chain processes by means of artificial intelligence and machine learning make ease-of-doing-business (Ranking of Indian States for Ease of Doing Business) a possibility with high productivity and profitability.

Also Read: Change Management Is At The Heart Of Digital Transformation

Most business startups in the present ecosystem require a well-researched implementation of technology. With these systems in place projects that typically require the work of several teams working with multiple vendors can now be accomplished with a single team effort.

More importantly, many of the new technology initiatives being led by state-owned forums the enterprises are open with the easy adoption practices and hand-holding ecosystem which is in place.

The Centre for Development of Advanced Computing (About C-DAC) has announced a 10-Year $1 Billion Fund, with an aim to support Indian Startups.

The collaboration between Microsoft and NASSCOM will drive innovation in India and contribute towards creating a digitally empowered and innovation-led society. This joint effort will act as the catalyst for technology-driven economic transformation in India.

How can MSMEs use technology to benefit their businesses?

While the government is assisting MSMEs in becoming self-reliant through a plethora of financial and digitization programmes, MSMEs can also help themselves by gaining a better grasp of how technology may help drive their business properly. The world has evolved dramatically in the last few years, and businesses must adapt to stay competitive.

While the office isn't going away for good, the hybrid model is. Businesses must equip their teams with tools and technology to work securely and effectively from anywhere and interact seamlessly in a mobile workspace. This is where Lenovo's comprehensive tried-and-true solutions based on the Intel® EvoTM vPro® platform and Windows 11 pro for business make eminent sense for MSMEs.

Government initiatives for MSME's

As the MSME sector experiences a technology revolution, businesses must become smarter in order to overcome hurdles and scale up to compete. Being aware of government initiatives such as MSME Samadhaan, Udyog Aadhaar, and Make in India can aid secure funds and obtain much-needed subsidies for surviving in a competitive industry. In addition, MSMEs must make quick and clever technological changes to improve productivity, staff satisfaction, and business growth.

MSME Samadhan Portal

The Ministry of MSME has launched an initiative that allows a supplier, also known as an MSE unit, to register an online complaint with the relevant MSEFC in their state/UT against a buyer of products or services. If the complaint is legitimate, the Micro and Small Enterprise Facilitation MSFC Council will investigate the case and make the rules and regulations available for proactive action by concerned Departments, CPSEs, Central Ministries, State Governments, and others to proceed with the sanction of interest.

  • Entrepreneurs and micro and small businesses can utilise the platform to file online applications for delayed payments: To submit an application, the user must have an Udyog Aadhaar Number that has been authenticated with an Aadhaar card.

  • Examine the status of the case: The platform allows MSMEs and entrepreneurs to check the status of their online applications for delayed payments.

  • Dashboard for Pending Payments: The Portal will give information on pending payments between MSEs and specific CPSEs, Central Ministries, State Governments, and other entities. PSE, CEOs, and Secretaries of the Ministry in question would be in charge of keeping track of delayed payments instances under their control and issuing the required directives to resolve the issues.

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