MSME Secretary: Enabling MSMEs to carve out a niche is challenging amid current heightened uncertainty

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September 23, 2021 7:37 PM

Ease of Doing Business for MSMEs: The Covid-induced lockdown last year had impacted MSMEs significantly across the majority sectors while e-commerce gained traction as consumers shifted to the digital channels for the purchase of goods and services.

Ministry of Agriculture & Farmers’ Welfare, Ministry of Housing and Urban Affairs, Ministry of Ports, Shipping and Waterways, Ministry of Textiles, and Department of Atomic Energy have already crossed the 25 per cent procurement threshold.

Ease of Doing Business for MSMEs: As micro, small, and medium enterprises (MSMEs) look at gradually coming out of the pandemic impact, enabling them to create a niche for themselves ahead will be challenging, MSME Secretary BB Swain said on Thursday. Addressing a FICCI event on FMCG and retail, Swain said “In the current times of heightened uncertainty, the question of enabling MSMEs to further carve out a niche for themselves is the challenging next step.” Moreover, overcoming the digital divide (for MSMEs) while complying with regulations will always be a ‘very very big’ challenge, Secretary noted.

However, he highlighted the importance of business transparency and efficiency along with economies of scale, etc. For scale. “Some features that are to be kept in mind are augmented transparency; enhanced efficiency; facilitating the ease with which business can be done; building economies of scale; and an efficient price discovery.”

The Covid-induced lockdown last year had impacted MSMEs significantly across the majority sectors while e-commerce gained traction as consumers shifted to the digital channels for the purchase of goods and services. Online marketplaces such as Amazon, Flipkart, Snapdeal, Grofers, BigBasket, and others had reported a steep increase in customers and orders even as more retailers and kirana owners were onboarded to cater to the online demand. The growth in e-commerce was also visible in the government’s public procurement platform Government e-Marketplace (GeM) as the government had introduced a separate category for Covid-related goods on the portal for sellers manufacturing Covid-related medical equipment and products to connect directly with the government buyers.

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“In the past one and half years the world witnessed pandemic-associated lockdowns and consequent closures of economic activities. This led to the growth of e-commerce across borders that further got accentuated. The progressive involvement of MSMEs in e-commerce, especially in the recent past, has really grown. The large number of providers registered at the GeM is a fine example of the same,” Swain added.

Arvind Mediratta, Chair FICCI Retail and Internal Trade Committee and Managing Director & CEO – METRO Cash & Carry India in his address at the event said that the share of e-commerce in retail is expected to grow from 6 per cent of the total market in FY 21 to almost 11 per cent by FY 26 while the share for modern retail, which has seen some headwinds, will probably remain static. “The traditional trade continues to do very well. They have been extremely resilient during the crisis and have gained market share from 87.1 per cent to 88.8 per cent of the market.”

Despite significant Covid impact on MSMEs, the government doesn’t have official data on the number of MSMEs shut due to the pandemic. “As MSMEs are there in both formal and informal sector, data regarding temporary or permanent closure of the units are not maintained by the Government of India in Ministry of Micro, Small and Medium Enterprises (MSME),” former MSME Minister Nitin Gadkari had said in a written reply to a question in the Rajya Sabha in February this year. Likewise, in September 2020 as well, former MSME MoS Pratap Chandra Sarangi in the Rajya Sabha had said that “no such record is available” for the number of MSME units shut down during the March-August 2020 period of the pandemic.

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