A rallying cry echoes through the global economic landscape, as India celebrates the presidency of the G20.The time to propel Micro, Small, and Medium Enterprises (MSMEs) into the forefront of sustainable growth has arrived. The New Delhi Declaration, endorsed by G20 nations, highlights the important role of MSMEs in bringing innovation, creating employment, and nurturing inclusive Economic Growth.
This clarion call resonates with experts, requesting government to simplify regulations, enhance access to affordable capital, and nurture a thriving ecosystem for these economic engines through progressive MSME policy frameworks. This article dives deep into the G20 Declaration's significance and explores the challenges and solutions surrounding MSMEs in India.
Fueling Growth: G20's Recognition of MSMEs
The New Delhi Declaration, adopted during India's G20 Presidency, truly acknowledges MSMEs as natural engines of Economic Growth. Start-ups and MSMEs are hailed as catalysts for innovation and employment generation which plays a very important role in shaping our socio-economic landscape. It has become necessary for G20 member nations to turn these words into real actions.
Experts' Insights: The Vital Role of MSMEs
Puneet Kaura - Recognising the Global Importance of MSMEs
Chairman of CII Delhi State Council and MD and CEO of Samtel Avionics System Limited, Puneet Kaura, accentuates that MSMEs are universally significant. The G20 declaration reiterates the need for governments to provide unwavering financial support- both financial and non-financial- to this sector, which has the potential to fuel employment and reinvigorate exports.
Bhagyashree Bhansali - Nurturing Innovation and Collaboration
Bhagyashree Bhansali, CEO of The Disposal Company, underscores the importance of simplifying regulatory processes, enhancing capital access, and fostering industry-academia collaborations. Such measures, she contends, will empower start-ups and MSMEs to drive technological innovation, sustainable growth.
Deepak Bhardwaj - The Finance Conundrum
Deepak Bhardwaj, co-founder of IoTechWorld Avigation Pvt Ltd, points out that one of the primary challenges MSMEs face is accessing timely and adequate finance. While various schemes like CGTMSE exist, banks often apply dissimilar policies, creating hurdles. He advocates for uniform financing criteria to facilitate MSMEs' access to the right amount of finance.
Ayush Lohia - The Electric Vehicle Revolution
Ayush Lohia, CEO of Lohia Auto, underscores the important role of start-ups and MSMEs in driving innovation and sustainability in the electric vehicle sector. Governments, he contends, should simplify regulations, provide financial support, and foster skill development to accelerate the transition to sustainable transportation.
Sanjay Sharma - Digitization and Inclusive Growth
Sanjay Sharma, MD and CEO of Aye Finance Pvt. Ltd., underscores that MSMEs are essential for India's economy, influencing GDP, employment, and exports. He highlights the importance of digital literacy programs, by explaining it further that if it is implemented effectively, it can definitely drive digital adoption and improvebusiness efficiency.
Challenges Faced by MSMEs
Complex Registration and Regulatory Process
Registering an MSME is fraught with complexity and regulatory prerequisites, including tax compliance and labour law adherence. While the Indian government has made strides in reforming the process, it remains challenging for MSMEs to navigate these intricate requirements.
Credit Accessibility
Accessing credit is a critical challenge for MSMEs, with a substantial portion dependent on informal sources due to limited formal financial sector engagement. High-interest rates and insufficient funding hinders technological and infrastructure upgradation.
Infrastructure Investment
Setting up the necessary infrastructure requires substantial capital, often elusive for MSMEs. Business loans are available, but approval depends on high turnovers and other factors, limiting small business`s growth potential.
Market Volatility
Intensifying competition from start-ups and e-commerce companies in the MSME sector has made market dynamics volatile. This increased competition creates challenges for small businesses, particularly those facing cash flow issues.
The Remedy: Empowering MSMEs
The government has initiated various measures to empower MSMEs and enhance their financial inclusion:
- Redefining MSME Criteria: By lowering turnover thresholds, local manufacturers benefit, encouraging more MSME participation in government procurement.
- CHAMPIONS Portal: The government's ICT-enabled portal streamlines processes and support for MSMEs.
- Financial Support Schemes: Initiatives like Pradhan Mantri MUDRA Yojana, Udyog Aadhaar, and Stand-Up India offer vital financial support to MSMEs.
- GeM Marketplace: The government's e-marketplace reduces costs and improves efficiency for MSMEs involved in government procurement.
Global MSME Development Insights
Globally, the success of MSME development has varied, influenced by the MSME policy and economic strategies of developing and developed nations. India must adopt an MSME opportunity framework to harness the great potential created by domestic demand, infrastructure spending, foreign investments, and anticipated double-digit growth in various sectors.
To unlock the potential of MSMEs and build a resilient economy, the following foundations should be laid:
- Come, Make in India: Encourage foreign companies to invest in manufacturing, services, and agriculture to meet both domestic and global economic demand.
- Digital India: Promote MSMEs' capabilities in the ICT sector in alignment with the government's vision.
- Export Contribution: Enhance global competitiveness by fostering research, innovation, and technology adoption while facilitating market access through trade agreements.
- Public Procurement Policy: Allocate at least 25% of procurement by the defence and public sector enterprises to MSMEs.
- Corporate Procurement: Incentivise large corporations to invest in MSME vendor development, focusing on R&D and innovation.
- Indigenisation: Encourage investments and outputs by large players and their MSME vendors to promote local manufacturing.
- Traditional and Heritage Industries: Support stakeholders investing in India’s traditional industries for sustainable entrepreneurship and market expansion.
- Women Entrepreneurship: With over 3 million women-led MSMEs contributing significantly to employment and output, policies must ensure equitable access to financial support and market opportunities.
A Call for Inclusive Economic Policies
Inclusive economic policies must empower and stimulate trade, lifting millions out of poverty. Collaborations between businesses and MSMEs, coupled with effective mentorship and support, can enhance competitiveness domestically and internationally. Strengthening MSME policy and ensuring financial support mechanisms will be key to achieving balanced Economic Growth.
Conclusion: The G20's Pivotal Role
MSMEs are the backbone of economies worldwide, and the G20 must prioritise their growth to achieve sustainable Economic Growth and development. With clear MSME policy, financial support, and strategic initiatives, these small businesses can thrive, promoting sustainable entrepreneurship and inclusive prosperity for all.
ViTWO believes that India's G20 presidency can leave an indelible mark in the global economic arena by championing MSMEs, advancing their capacity to meet global standards, and accelerating Economic Growth on a global scale. ViTWO continues to strengthen the MSME ecosystem with its virtual CFO services and tech-backed solutions - vitwo.ai and Claimz.
The time for action is now - as we begin our journey toward a more inclusive, innovative, and resilient economic future.