‘MSMEs can play a key role in achieving ‘self-reliant India’ vision’

The MSME (micro, small and medium enterprise) sector in India can play a significant role in achieving the vision of self-reliant India supported by a three-pronged strategy.

The outbreak of the pandemic will make countries do a rethink on strengthening their local supply chains. India has already stated a vision of ‘Atmanirbhar Bharat’ or a self-reliant India, which will need strengthening of the local industries and their standing on a global stage.

In this vision, MSMEs can become a major growth driver, says a report of NRI (Nomura Research Institute) Consulting & Solutions.

“As is oft-quoted, every crisis brings to the fore an opportunity; the current one has created an urgent need to focus on the MSME sector, which was facing neglect over the last couple of years,” said Ashim Sharma, Partner and Group Head, NRI Consulting & Solutions.

Key parameters

Three key parameters that are vital for the success of MSMEs include financial stability, availability of skilled labour in MSME clusters, and market competitiveness of their products to achieve import substitution as well as exports.

While government measures such as collateral-free loans have paved a path for ensuring the financial stability of MSMEs, immediate relief either from the public sector or the private sector will also be needed to ensure the survival of such enterprises,it says.

This is a big challenge in terms of availability of skilled labour to the MSMEs in and around these urban centres. Ensuring the availability of skilled labour by either skilling local workforce or making the conditions lucrative for the migrant labour to come back is essential for the growth of MSMEs.

“Carefully planned interventions with a robust implementation plan can ensure the revival and strengthening of the sector, and will also in the process restart the economic engine in a big way,” said Sharma.

Market-oriented strategy

With a self-reliant India vision, it is highly important to improve the competitiveness of MSMEs through an inclusive market-oriented strategy. There are five key areas that need stronger focus.

There is a need to improve the capability of Indian MSMEs to supply quality products, especially with new norms of operations being introduced due to Covid. Maintaining social distancing, running on reduced capacity, would further aggravate the situation for the cash-starved MSMEs.

To remain relevant in the market, MSMEs need to be adaptable with changing market and variable demand scenario.

Ensuring the capacity and availability of raw materials to MSMEs is also crucial. The disruption in global logistics has broken the chain for some key raw materials. Low working capital availability also makes it difficult for MSMEs to restore raw material supply

The impact of Covid on business operations will require innovative methods to reduce cost.

Automation is essential in some areas for implementing distancing and also for quality control. MSMEs could be introduced to low-cost automation techniques, which work in tandem with the human workforce.

Finally, branding and advocacy will also be needed to leverage the positive connotations associated with certain Indian products and assess negative connotations that can be removed.

This crisis is a turning point for the MSMEs and they will either flourish or perish based on the support provided and the actions taken by the companies themselves, the report added.

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