Ease of Doing Business for MSMEs: Even after being one of the largest employment generators in the Indian economy, the SME sector contributes only 29 per cent to our total GDP.
- By Nikhil Arora
Ease of Doing Business for MSMEs: India has emerged as one of the fastest-growing economies in the world, backed by rapid technological proliferation and liberalization brought into effect by the government, over past two and half decades. With booming socio-economic ecosystem as a foundation, India is set to propel itself towards attaining an ambitious goal of a $5 trillion economy by 2025. Supported by large-scale progressive initiatives such as Digital India, Startup India and Make in India among others, we are fast moving towards discovering newer ways to unlock India’s entrepreneurial spirit and turn this dream into a reality.
The country’s entrepreneurial ecosystem has been central to India’s growth story and will continue to be the wind beneath the wings of India’s soaring economy. India is home to over 63 million Small businesses spread across geographies. However, even after being one of the largest employment generators in the Indian economy, the SME sector contributes only 29 per cent to our total GDP. In order to move its growth needle, right legislative support and an enabling framework is a necessity.
Navigating the challenges
Traditionally, a large portion of SMEs has been reluctant to expand their operations. However, with the changing market dynamics and better opportunities, a sizeable chunk is now looking for growth opportunities. Although the sector has realized its importance for India’s economic elevation, it continues to be impacted by a slew of challenges, which has hampered its growth. For instance, absence or unavailability of basic business benefits such as credit can cease the growth potential of a small business even before its inception. Other problem areas that still require greater focus by the government are meagre access to markets; extensive documentation; insufficient infrastructure and limited access or knowledge to technology.
While the recent reforms introduced by Government of India such as greater fund allocation, better tax incentives, 59-minute loan sanction, pension schemes etc. are encouraging to help grow the SME sector, however, these changes have yet to hit the ground reality on a broad scale.
The Indian imperatives
India’s entrepreneurial journey continues to be on the rise and the SME sector emerges as one of its biggest growth drivers. But to further push India towards its next growth wave, there is a critical need to employ a few key measures across some touchpoints:
- Nurturing a culture of entrepreneurship and innovation – With an increased emphasis on digital and a rapidly growing network of connected internet users, the next generation of Indian entrepreneurs will emerge not from the traditional hubs but from Tier-II and Tier-III cities. Initiatives such as setting up of dedicated platforms for mentoring services will aid these budding entrepreneurs, and help existing SMEs to address their day-to-day challenges and run their businesses more efficiently.
- Acquaintance and adoption of new-age technologies – Technology is increasingly being seen as a vital tool by SMEs for bringing in process efficiencies and delivering a higher output. SMEs are now realizing that by getting online, they have the power to reach a wider audience with just a click of a button and expand their ventures exponentially.
- Government and industry collaboration – There needs to be an enhanced push towards private and public sector partnerships to develop better digital infrastructure and provide cohesive skill development opportunities by building incubation centres and consequently, augmenting a wider market potential.
- Increase participation of women workforce – SMEs, primarily, have always been comprised of first-generation entrepreneurs, with low women participation. With active participation in the SME growth journey, women entrepreneurs are now making a significant contribution to the Indian economy. Going by the government figures, there are over 8 million Indian women-owned small businesses in India. With the help of favourable policies and opportunities, the participation of women in the workforce can further boost the growth of the country’s entrepreneurial ecosystem by leaps and bounds.
SMEs Leading the Winning Leap
Given that the benefits of digital technologies are gaining wider a footprint in India, we can expect greater adoption among SMEs. There is no doubt that digitally empowered small businesses can have a competitive advantage, generate greater employment and can drive increased regional development. Realizing the importance of this sector, the government has already launched several initiatives to aid its growth, but, there is still a lot that needs to be done to spread adequate awareness. As India prepares for its economic leap, it is important for all relevant government and industry bodies, to come together to plug the gaps and help SMEs realize their true potential.
(Nikhil Arora is the MD and VP at GoDaddy India. Views expressed are the author’s own)