Revival of MSME Sector & The Hope to Outperform

When the COVID Pandemic arrived, the MSME sector was already in a challenging situation due to global economic cues and with this global pandemic, things have gone even worst. But whatsoever could this challenging situation be, the industry always has to keep the hope for a strong come back. Yes, situations could be tough, but an entrepreneur must have to keep the faith and explore every single opportunity of economic revival. Well, industry leaders and experts have a better, clearer idea about this hope.

The idea for every entrepreneur in today's time is to keep hope alive and work hard. Dr. Ajay Kela, CEO and President of Wadhwani Foundation in an exclusive conversation with Faiz Askari of SMEStreet, highlighted interesting insightful on a conversation which was focused on the revival roadmap for MSME Sector. Wadhwani Foundation is known for working in the direction of entrepreneurship development and the organization has huge credibility behind it's name for working in the direction creating or nurturing entrepreneurial success stories.

Here is an edited excerpt of this exclusive interaction:

Faiz: Do you think exports hold the panacea to the quick revival of the MSME sector now?  

Ajay: MSMEs contribute 48-50% of India’s exports. In the current existential crisis created by the COVID-19 pandemic, a particular focus towards boosting exports will provide a fillip to the MSME sector. However, for this to happen: 

• MSMEs need to be ready to Pivot and restructure their business operations to opportunities the crisis has created. For instance, healthcare, online-anything, global-logistics are examples of opportunities that will explode and are here to stay 
• State and Central Govt. should draw policies that accelerate India as an alternate manufacturing hub to China and support small enterprise led manufacturing activity
• For MSMEs, embracing digital is a must to reach out to markets and customers far and wide at minimum cost and time
• Accelerating technology adoption for improved innovation and enhanced quality of products will set them up towards a competitive advantage

Faiz : Why more of foreign trade for Indian MSMEs could be seen as a positive sign indicating their revival.

Ajay: The crisis has made the world an oyster for India, and its MSMEs as wide online-adoption opens up global markets, global companies look for alternative supply-chains such as India and weaker rupee boosts price competitiveness. Once penetrated, these opportunities will translate into a long-term positive impact on the economy and the sector, opening permanent doors to a broader market. 

What are the top 3 bottlenecks hurting Indian MSMEs exporting firms in India?

1. Ease of Doing Business: Despite an improvement in India’s World Bank Ease of Doing Business (EoDB) rankings, much more needs to be done for the MSME sector as the burden of compliance severely impacts them.  Therefore, further reduction in the regulatory framework will go a long way in unleashing the true potential of MSMEs.
2. Access to affordable business advice and consulting, especially as it relates to global opportunities
3. Bank credit and slow processing of MSME loans hamper their ability to meet export-related costs and investments