The MSME sector plays a pivotal role in the growth of the Indian
economy. The majority of the growth in the MSME sector is brought by
the new and innovative businesses that are building stuff useful for the
local people as well as have a demand in the international market. The
Ministry of MSME is very well informed about the current trends in the
market and ensure that very forward looking policies are provided for the
MSME businesses. There are many challenges and opportunities within
the MSME sector. The Businesses belonging to this sector must pay active
attention to all the changes that are happening within the sector and
constantly strive to change and adapt according to the needs and wants
of the time they are in.
The contribution of the MSME sector to the economy of the country is
unfathomable. There are many small unorganized businesses in
different parts of the country that need a push to move forward
financially as well as in terms of marketing. Due to the availability of
cheap land and labor, the probability for these businesses to survive
tough market conditions are the highest. There are many lucrative
opportunities for new employees who are entering the sector on a
regular basis. It is extremely important for all of them to make sure that
they are enough skilled for the required job role or they can make use
of the various skill development programs as laid out by the Ministry of
MSME.
Due to the Covid pandemic the global economy had to bear the brunt
leading to severe financial catastrophe. Many of the MSME businesses
found ways to recover from that as they had robust risk management
skills. They were competitive enough to survive the storms of the brutal
market conditions. It is thus necessary for the MSMEs to be well
advanced in their time regarding the maintenance of risk parameters.
The Ministry of MSMEs has come up with a variety of MSME schemes
for the welfare of the MSME sector. There are some severe problems
faced by MSMEs in India. It is very important to tackle these and the
MSMEs are assisted by the stakeholders and other industry insiders in
such matters of concern. It is however very stressful for the newer
breed of MSMEs to tackle multiple challenges when they have just
started with the business.
For more information: https://smeventure.com/role-of-msmes-in-the-face-of-a-global-economic-crisis/
Following are some of the major challenges of MSMEs discussed in
detail :
1. Infrastructure :
In India, the infrastructure sector is extremely important because we
are often referred to as the ‘world’s back-office because so many works
in this sector are carried out overseas. Applications such as eCommerce
and BPO have created more jobs in low-wage countries like India.
2. Technical Changes :
There has been no dearth of technical changes over time, and most
industries have undergone some form of change in order to remain
competitive. As a result, Indian MSMEs have had to deal with some
very important changes which have affected their growth potential. At
first, there was a change in the ownership right of land, which has made
the sector more prone to mismanagement and, with it, a fall in
productivity.
3. Lack of professionalism :
A majority of Indian MSMEs lack professionalism despite being vital for
larger industries’ growth. As a result, they are highly prone to
corruption and abuse of power, which has a huge impact on the
productivity of their businesses.
4. Skills :
When it comes to skills, Indian MSMEs are far behind their counterparts
in other countries because they depend heavily on the help of informal
workers, who are not paid well and lack the technical skills which can
help enhance productivity. As a result, smaller firms are forced to take
up jobs that require low levels of skill and expertise, which further
affects their growth prospects in the long term.
5. Low productivity :
MSMEs are not necessarily very productive, but they perform certain
tasks that emit more value than they produce. Retailers sell consumer
goods to end-users at relatively lower prices. In fact, MSMEs may be
very productive only when it comes to being cost-efficient and are
capable of creating high volume at very low costs. But given that their
production is on a small scale with low margins, low productivity can
put them at a disadvantage, especially when compared with larger
firms.
Above factors contribute towards problems faced by MSMEs in India. If
these challenges faced by MSMEs in India are rectified at the earliest
then there will be no force that will be able to stop them from reaching
newer heights and bringing more innovation to the ecosystem.
MSME problems & solution :
The majority of the problems that have been discussed so far create a
sense of distrust amongst the participants of the MSME economy. The
Government has been very forward looking in terms of evaluating the
current market conditions and has set up several programs that are
aimed at boosting the effect of the MSMEs. With the help of the MSME
schemes laid down by the Government, the MSMEs are able to increase
their level of output. Majority of these programs are set up at the state
level and there is a serious need for these programs to be adapted at
the National level. Many of the Government policies that have been
established help the MSMEs at reducing cost such as providing land and
utility subsidies to MSMEs and also improving the access to finance for
smaller firms.
Do watch: https://www.youtube.com/shorts/mxmhEv0xPgM
MSMEs face a number of challenges, but the government is doing its
best to ensure that the MSME sector remains competitive. The cost of
funding is gradually decreasing and both public and private sectors are
working towards developing better products that can be competitive in
terms of quality and price. Perhaps, if we get rid of corruption and
focus more on quality, then MSMEs will be able to beat bigger firms.