MSMEs are the growth engines of the Indian economy as they contribute highly towards the socio-economic development of India. For many years, MSMEs in India have been playing a pivotal role by contributing around 30% to Indian GDP. After agriculture, the MSME sector is the second largest job provider in India.
However, MSMEs around the world, and especially in India, have been hit by the Covid-19 pandemic. Moreover, the lockdowns and low consumer demand inhibited the regular cash inflow to the MSME sector. Even now, a large proportion of MSMEs are struggling because of the slump. While some MSMEs have run out of capital, others are shutting down due to weak consumption sentiments. Thus, it is safe to say that we need a revival plan for MSMEs while focusing on innovation and technology. There is no doubt that government schemes, cheap loans, and bailout packages have a major role in MSMEs’ revival. Yet, we believe that seeding an innovative and inventive mindset on Indian MSMEs can be the ultimate decision-maker.
How can MSMEs bring and boost innovation in the post-covid scenario?
There is a saying that goes like this, “Every cloud has a silver lining.” The Covid-19 pandemic was a major setback for MSMEs. However, it was a double-edged sword that taught us lessons and opened alternative doors. Here are simple yet fruitful suggestions for our MSME sector to use innovation as an effective escape from this cyclical slowdown.
- To foster innovational MSMEs in the post-covid world, we need to focus on vocational and skill training for MSME workers. At present, our vocational training institutions are lagging both in terms of capacity and quality. A focus on the quality enhancement of vocational courses can address the issue of the lack of a skilled workforce.
- To build successful MSMEs in the post-covid world, an integrated focus on creating an entrepreneurial infrastructure is required more than ever before.
- Pandemic and resultant lockdowns highlighted the rich-poor and urban-rural divide in India. An inclusive growth via MSMEs can close this gap by fostering inclusive innovation.
- We need to promote innovation and technological use under local scenarios for MSMEs success. Innovating at the local Indian level will address the mega issues such as the operational scale and efficient leveraging of local resources. It will also aid in identifying the target customer size, potential reach, optimal revenue and capital costs.
- Finally, a collaborative approach can be a game-changer, as it will provide a platform for exchanging and pooling of ideas. Holistic collaborations between various stakeholders, like governmental departments, public and private institutions, incubators, training centers, and most importantly, MSME workers can become the magic wand to drive success for MSMEs, in the post-covid world.
Along with focusing on these domains, we can also provide regulatory sandboxes for MSMEs to try their innovative launches before launching into the market. India needs to set up a permeating indigenous model. This is undoubtedly possible by collaborations between Startup India, Digital India, and Make in India programmes. Last but not least, every successful innovative and technological product should be institutionalized. It will ensure that such innovations sustain and ultimately gain ground in the market.
Changing the MSME landscape by bringing innovation into the picture
While the MSME sector is undoubtedly one of the key growth sectors of India, it is facing critical setbacks. Lack of innovations and technology is one of these significant barriers for MSMEs in India. Here are a few reasons why MSMEs need to catch up with innovation and digitization trends.
- Digitization of the MSME sector, coupled with innovative solutions, can reduce the operational and functional costs for MSMEs. Effective technological results will remove the roadblocks and allow MSMEs to focus on core innovation.
- Innovative and creative solutions can help MSMEs to introduce new products. Such innovative products and services will be best suited to the consumer’s needs.
- Innovation can aid in eliminating the present barriers, such as cut-throat competition, supply chain issues, technological discontinuance. Practical solutions to such problems can drive optimum growth of MSMEs in India.
In the post-covid world, the sustainability of MSMEs and India’s socio-economic growth can only be ensured if its MSME sector is innovative. For this to happen, a multi-pronged approach that targets the infrastructural, technological, financial, and environmental bottlenecks is required. MSMEs also need to incorporate green technologies and research in the environmental sector. All these suggestions will help in boosting their competitiveness at the global level. More than competitiveness, sustained MSME growth will contribute towards realizing our dream of becoming a $5 trillion economy.
About the Writer
Rakhi Tushir is a prolific writer with interests in business, technology, policy, finance & economics.