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MSMEs Can Power A Stronger Economic Recovery In India: Manish Kumar, KredX

The MSME sector has the potential to correct regional imbalances by generating industrialisation in remote rural areas, he said

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The adoption and embracing of new technologies have become crucial due to the increasing demands of supply chain finance rising globally, said Manish Kumar, Founder and Chief Executive Officer (CEO), KredX. Edited excerpts: 

Tell us about KredX and how it is empowering micro, small and medium enterprises (MSMEs) in India? 

The MSME sector that powers India’s economic growth has long been credit-deficient. KredX, since 2015, has been addressing this gap by providing quick and collateral-free working capital to businesses both small and large. MSMEs helped by KredX's platform have increased their revenue by an average of 56 per cent year-on-year while generating over 1.5 lakh jobs. 

MSMEs in rural areas have been struggling to cope with current situations like Covid-19 and high inflation. Do you have any plans for MSMEs in rural areas? 

KredX has worked to democratise financing since 2015 and we continue to expand our services to underserved sectors. Our flexible ticket sizes allow us to serve businesses large and small. 

For example, our closed loop channel financing solution KredX Pay Later is serving many agricultural businesses including farmers, traders, small grocery retailers, fertilizer retailers and distributors, milk distributors and retailers; across rural areas in Uttar Pradesh, Maharashtra, Odisha, Rajasthan and Madhya Pradesh. We plan to expand to other states by 2023 and cater to the rural markets across India.  

What are the major changes you witnessed post-Covid-19 pandemic, as far as businesses are concerned? 

As per a KredX report, the pandemic led to longer payment delays, across every industry. Pre-pandemic, on average, an enterprise waited for 66 days before an invoice was paid by the counterparty.  However, the average waiting period for payment increased to 68 days.  

Different industries have experienced disruptions at various stages of the supply chain. The most significantly impacted segment was offline retail where the payment terms increased from 66 days in the pre-Covid era to around 149 days in the post-covid era.  

The pandemic also underlined the importance of supply chain finance as it came to the aid of the slowing economy. The adoption and embracing of new technologies have become crucial due to the increasing demands of supply chain finance rising globally. Technologies like machine learning, artificial intelligence (AI), blockchain, internet of things (IOT) are at their nascent stages in the SCF industry. 

However, we are likely to witness some huge advancements that will make the entire supply chain financing process more transparent, efficient, responsive and reactive.  

How can SMEs become the main drivers of the country's growth post-Covid-19? 

MSMEs can power a stronger recovery from the Covid-19-induced slowdown, given that they are innovators. Over the past few decades, the SME sector comprising the service industry, manufacturing, packaging, infrastructure, food processing, IT and chemicals has developed as the most dynamic source of growth in the Indian economy. 

This sector has the potential to not only offer huge employment opportunities in the post-covid era but also correct regional imbalances by generating industrialisation in remote rural areas. 

Additionally, driving nearly 50 per cent of the country’s exports. MSMEs can thus truly help achieve India’s target of becoming a USD 5 trillion economy by 2025.  

What are the major opportunities your company provides to rural communities? 

Several of our efforts are being deployed in training and educating MSMEs to get them well versed with the usage of the platform and the contemporary and alternative credit and finance available for business growth. 

Our solutions and offerings are also designed in a way that can be customised as per the rural business needs which is creating tremendous opportunities and growth avenues for rural businesses.  

Many Indian MSMEs face several challenges due to the pandemic. What are the challenges you have faced in the last two years? 

The pandemic impacted supply chain ecosystems around the world, and India was no exception. The most visible impact is delayed payments, which can quickly incapacitate businesses. Despite digital embracement, increased time, costs and resources were spent chasing overdue invoices. There was a 39 per cent delayed payment to suppliers that essentially transferred the problem up the supply chain.  

Supply-demand imbalances pushed businesses across sectors to grapple with multiple challenges including rising commodity prices. This paired with inflation meant that the cost of capital skyrocketed too. As a business, anything which impacts the supply chain becomes a hindrance to us too and we have over the course of the past two years worked to create solutions for the same. 

As India is recovering from the Covid-19 pandemic and moving on the path of economic recovery, what can be expected from your company in 2022? 

This year, our efforts will be to bring a holistic offering to the market.  We are also noticing a huge demand from the tier 2 and 3 cities and we hope to bring door-step and affordable finance across India. For the next 12 months, we will be focused on very aggressive growth and aim for 2x growth by 2023. 

Tags assigned to this article:
Indian MSMEs economic recovery india manish kumar KredX