#Digitization: The enabling factor for MSME growth in India post the pandemic!

“The Indian MSMEs sector contributes about 29% towards the GDP through its national and international trade”

by Shrutee K/DNS

As the much feared COVID pandemic is losing its toll, the world economy is experiencing a rebirth. With India at the cusp of a digital edge, Industry 4.0 has built in-roads across sectors, accelerating the process of digitization by at least a decade.

Even as the pandemic caused unprecedented disruptions across businesses and supply chains, the Micro, Small, and Medium Enterprises (MSME) sector was the worst hit. Contributing to about 29% of the country’s GDP and referred to as the country’s growth accelerator, the MSME sector is now embracing digital transformation persuaded by the rise of the internet economy and a host of new-age start-ups. Several tech-led companies & Business Accounting firms have also joined the movement to deliver creative solutions to MSMEs. Also, the government’s recent efforts have been beneficial in re-establishing its footing.

In the Union Budget, the Government has tried to magnify the Digital India vision and importance of technology in all focus areas like infrastructure and skills. MSME eco-system is expected to get a nice boost given the increased focus in developing the sector in the past few years. The extension of ECLGS to March 2023 will ensure to fill the much-needed credit gap and MSMEs will get sufficient time and funding to carry on their functions smoothly. Also, the revamping of the CTGMSE scheme will help the micro sector businesses who were not able to avail ECLGS earlier because they did not have existing credit outstanding, which was the basic requirement for availing ECLGS.

Sharing his views on the same Mr. Rajesh Gupta, CTO & Co-Founder of BUSY Accounting Software says, “The acceptance of Digital Transformation by local businesses has been a revelation in the MSME & SME sector. Today these business owners can leverage complex technology to streamline their day-to-day functioning, this in return is not only helping them in addressing to a much larger consumer market but their financial and operations needs are also being taken care of”

“To add to it, there are also effective measures taken by the Indian Government to integrate these rural business owners with the National Economy” He further adds

The acceptance of Digitization will enable MSMEs to grow faster with digital payments & in turn this will lessen the credit burden. Digital acceptance of invoices is also one of the few good steps in digitizing the value chain. Today, MSMEs can have seamless access to Financial Accounting, Inventory Management and Management Information systems with the help of these digital tools.

Given the rapid rise of digital payments it was also critical to develop digital infrastructure to support digital banking, which has enormous potential. With enhanced access to funds, clusterisation of MSMEs and ease of doing business initiatives, the sector is expected to grow exponentially.