Indian small and medium-sized enterprises (SMEs) are strongly affected by the ongoing coronavirus pandemic, especially after the second deadly wave. However, he still holds the power and ability to play an important role in the development of Indian economy, especially in rural areas.
According to World Bank estimates, SMEs account for around 90 percent of businesses and over 50 percent of jobs worldwide.
Sanjeev Kumar, CEO of Spice Money, said: “MSMEs are one of the strongest pillars for the growth of the Indian economy. There are over 63 million MSMEs in India providing jobs for nearly 100 million people residing in remote areas.
After the digital revolution in India with Prime Minister Narendra Modi’s “Digital India”, rural MSMEs can take advantage of an online marketplace for business growth, which can further stimulate the rural economy.
While talking about exploiting the online marketplace, Kumar said, “Exploiting the online marketplace has become a necessity for MSMEs to ensure that their products reach customers living in remote areas of the country. The increased penetration of mobile and internet connections in rural and semi-urban areas has enabled customers to purchase products online with the click of a button on their smartphone. Its potential was clearly visible during the pandemic-induced lockdown, when purchases on e-commerce sites grew at an exponential rate. “
Formal SMEs contribute up to 40 percent of national income (gross domestic product, GDP) in developing economies. According to World Bank estimates, 600 million jobs will be needed by 2030 to absorb the growing global workforce, making SME development a high priority for many governments across the country. worldwide.
“The online market model can also help MSMEs to increase exports of the products they manufacture to the world. Even with the existing advantages of the online market model, very few MSMEs sell and export their products online due to lack of digital skills. and skepticism about adopting newer business models. A majority of companies refrain from sharing data with the online market. Along with this, the lack of transparency in dispute resolution processes poses an additional challenge for the adoption of online market models among MSMEs, ”Kumar mentioned.
Besides road connectivity, rural India also needs digital connectivity, through which it can grow its business. According to the World Bank, India had 20.95 ATMs per 100,000 adults in 2019, very low compared to other countries. While over 65% of India’s population resides in rural India, rural areas account for only 20% of all ATMs in India.
“Strategic partnerships between government and fintech players, especially those focused on rural areas, can help address these challenges. In addition, it is crucial to put in place training programs for the MSME sector in order to bridge the existing gap. Some countries have already introduced policies encouraging small businesses to use online platforms and we should also take the necessary steps to speed up the process. The first results may be limited, but this will help increase the growth potential of the sector in the long term, ”said Kumar.