Leading SMEs of India 2021

23 Way Forward There cannot be denial to the fact that the growth of the MSME sector is pre-requisite to the overall economic revival. Acknowledging this, the government has launched various policy initiatives and schemes to promoteMSMEs. For effective mitigation of problems faced by theMSME sector, a framework has been lined out involving theMinistry of MSME and the departments thereof. However, this framework needs to be flexible in its existence and should evolve with the changing dynamics of the business environment. For Authorities: Easy access to credit is key to foster growth of the MSME sector. During the period of downturns like COVID-19, the Government has always stepped forward to release aid to the sector to ensure sustenance of the MSMEs. In the current scenario, creating a favorable environment to identify, assess and cater to the credit requirements of MSMEs is essential. However, the informal operations of MSMEs and limitations in ascertaining the qualification of MSMEs for availing credit remains a key challenge. Through its efforts, the government has been able to reduce the size of informal economy to 15-20% of the GDP in FY 2020-21 compared to 52% in FY 2017-18. The Government need to focus on imbibing a robust information mechanism system (such as the MSME Databank) and implement regulations that require MSMEs to report necessary information to the authorities. Further, the Government can leverage on this information and design a more robust credit monitoring mechanism which shall streamline the end-to-end process of credit issuance and recovery for banks. For Large Corporates / Buyer Industries: The change in definition of MSME is likely to bring in a major shift in the vendor management strategy for large industries which are often buyers of finished products manufactured by MSMEs. With the increase in thresholds, higher number of entities now qualify to be identified as MSMEs, thus adding pressure to these buyer industries to make supplier payments within 45 days. This can put some pressure on working capital of these large businesses and may increase their intent for procurement towards non-MSMEs. For MSME: With the revised definitions for MSMEs, entities in the sector should focus on increasing their scale of operations and move up the chain frommicro to small and beyond. Further, to obtain adequate support from the authorities, MSMEs should actively engage with the Government to provide the necessary information as per the defined periodicity. Collective action from the sector in this direction shall help the entities to leverage on availing finance and improving their position in the value chain. In the last decade, the penetration of digitalization has increased and helped companies in different ways – optimized operations, better credit management, increased focus on core skill development and others. With increased availability of enterprise resource planning (ERP) solutions as per the scale of business, MSMEs should evaluate implementation of ERP solutions which shall aid in better operations management. It will also help in strengthening the information collation process driven by the authorities with accurate and timely reporting by the MSMEs. With continuous innovation in the digital technology, it becomes imperative for MSMEs tomove to Cloud Computing, Big Data, Artificial Intelligence, Machine Learning, Data Mining, & Internet of Things (IoT). MSMEs should leverage upon the various training and skill development programs launched by the Government to train their resources at a minimal cost. Highly skilled workforce shall help entities in achieving better productivity and return on investment made in the work force. Dun & Bradstreet