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BW Businessworld

Periodic Awareness Programmes May Help MSMEs Adapt Digitisation

The benefits of digitalisation are umpteen for the MSME which permits them to separate themselves from their rivals

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Digital innovation can fundamentally empower India's MSME section, gave the arising framework has joint buy-in from the government, solution providers and specially clients.

The benefits of digitalisation are umpteen for the MSME which permits them to separate themselves from their rivals. Online businesses permit MSMEs to accomplish more prominent admittance to assorted transnational business sectors and can lessen the dangers inside supply chains.

To get more details on it, BW Businessworld interacted with Dr Ravi Modani, Founder and CEO at 121 Finance. He says MSMEs are considered an essential pillar of the Indian economy due to their considerable contribution to GDP. Edited Excerpts:

How is digitalisation helping the MSME sector?

Digitalisation is a revolutionary step for everyone. Technology in general and digitalisation in particular reduces the cost of operations, of any process or work. The cost of technology is going down each day and helping the MSME sector to adapt it.

The use of the latest digital technologies among MSMEs has also risen in the face of Covid-19 as increasingly small businesses are using digital tools and becoming part of digital transformation.

MSMEs are using it to digitalise storefronts, better customer engagement and cost-effective business policies. But it can take some time for this sector to accept digitalisation because of the traditional nature of the business. MSMEs require better payment and delivery services, a simplified customs procedure, and a primary data privacy system to move ahead without any doubt in their minds.

For instance, working capital and supply chain finance are common issues among MSMEs, but digitalisation has made it easy and quick for MSMEs to access collateral-free finance. They need to be aware of innovative solutions as digitalisation can bridge the gap between MSMEs and success.

Will the developing digitisation lead the MSMEs to make way for India's economic growth?

MSMEs are already considered an essential pillar of the Indian economy due to their considerable contribution to GDP. They have employed 120 million individuals and contribute around 45 per cent of the overall exports from India. Surely, digitalisation will help them boost these numbers, eventually resulting in India's economic growth.

The government has understood the importance of the growth of MSMEs. The Registration of Factors Regulations 2022 by RBI, the collaboration of GeM (Government EMarketplace) and Sahay (India's first fully digital lending product for MSMEs, enables the complete journey from application to underwriting to sanction and disbursement in real-time), and support from the MSME ministry in India are some positive steps towards the growth of MSMEs.

Government is also promoting Digital India as the mission to take the Indian economy to next level and thus putting all its forces behind various initiatives like UPI, NPCI, Credall, Account Aggregator, GeM, ONDC etc.

As digitalisation has its drawbacks, how could MSMEs tackle it?

Indeed, there are a few drawbacks of digitalisation, fortunately, not much. But still, MSMEs need to be imperative when choosing the right methods to run the business efficiently.

MSMEs should look for established vendors for technology or regulated entities when it comes upon services like payments, collection, lending, banking etc.

The biggest drawback of technology is its ever-evolving nature, which effectively reduces its cost and adds more features. MSMEs need to continuously stay abreast with these developments, by learning, attending forums etc.

What more could be added to MSMEs by our government?

The government should start a digital adaptability rating for the MSME and enhanced rating should convert into a higher commercial success for the MSME, whether through price preference or through order preference in the government.

They should also conduct periodic programmes for awareness and knowledge enhancement for technology adaptation/digitisation for MSMEs.

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