Micro, Small, and Medium Enterprises (MSMEs) play a crucial role in the global economy, accounting for 90 per cent of businesses, 60 to 70 per cent of employment, and 50 per cent of GDP worldwide, according to the United Nations.
As per the MSME Udyam registration portal as of July 12, 2024, 4.70 crore MSMEs registered (which includes the Informal Micro Enterprises (IMEs)), creating employment of more than 20.33 crore. In Andhra Pradesh and Telangana, 8,79,836 and 9,54,226 MSMEs are registered respectively on the MSME portal. In Telangana, Hyderabad District has the maximum units of 173707 while Mulugu District has 3335 units, which is the minimum. Similarly in Andhra Pradesh, Krishna District with highest units of 66909 while Alluri Sitharama Raju District has the lowest units at 2688.
These enterprises are the backbone of the nation contributing approximately 30 per cent to India's Gross Domestic Product (GDP). The Government of India have been implementing a robust array of initiatives aimed at bolstering the Micro, Small, and Medium Enterprises (MSME) sector, recognising its pivotal role in the economy. These efforts range from financial support and procurement policies to capacity building and market integration. Despite all these, still MSME sector still needs to improve a lot on leveraging technology for business development in various ways.
MSMEs Can Perform Better With Technology
Industry Revolution 4.0 (IR 4.0) focuses on the integration of digital technologies, automation, and data exchange in manufacturing processes. This transformative trend encompasses cyber-physical systems, the Internet of Things (IoT), cloud computing, and more. Though use of correct technology for businesses can lead enterprises touch sky-high success, as accurately stated by Prime Minister Narendra Modi, "I see technology as a means to empower and as a tool that bridges the distance between hope and opportunity".
Since the early 2010s, the adoption of Industry 4.0 technologies has been gradually gaining momentum in India, with both the government and private sector making investments and efforts to drive the digital transformation of the manufacturing industry, its full advantages are not yet explored. Though we have not fully adopted Industry 4.0, already Industry 5.0 is in place to help people work alongside robots and smart machines. It's about robots helping humans work better and faster by leveraging advanced technologies like the Internet of Things (IoT) and big data. It adds a personal human touch to the Industry 4.0 pillars of automation and efficiency.
To revolutionise, MSMEs have to adopt and operate on emerging technologies which offer tools that enhance efficiency, flexibility and growth potential, emphasising digitalisation, sustainability, and innovation, which reflects the evolving needs of businesses and consumers alike. Some of the pillars of IR 4.0 are highlighted for quick adoption for Strategic digital adoption.
Cloud computing provides affordable and secure access to sophisticated IT infrastructure and is considered as backbone of all transformative technologies. Artificial Intelligence (AI) and Machine Learning (ML) are also playing very important roles in transforming MSMEs. These technologies automate routine tasks, provide insights through data analytics, and enhance decision-making processes for the management. For instance, AI-driven chatbots manage customer inquiries 24/7, freeing human resources for more complex tasks. Predictive analytics tools help businesses forecast demand, manage inventory and optimise supply chains, thereby improving overall operational efficiency.
The Internet of Things (IoT) technology connects devices and systems, enabling real-time monitoring and data collection. MSMEs can leverage IoT for various applications, such as managing logistics, monitoring equipment health and improving energy efficiency. IoT-enabled sensors in manufacturing can detect equipment malfunctions before they lead to costly downtimes, ensuring smooth operations and maintaining productivity.
Blockchain technology is gaining prominence as it offers MSMEs enhanced security, transparency and efficiency in transactions. It is particularly beneficial for supply chain management, providing a tamper-proof record of product history to improve traceability and reduce fraud. Additionally, blockchain can streamline financial transactions, reducing the costs associated with intermediaries and enhancing trust in digital transactions.
As online shopping continues to grow, many MSMEs are taking advantage of e-commerce platforms to access new markets and expand their reach.
Sustainability And Green Practices
There is an increasing number of small businesses that have taken up sustainable practices to cater to consumer needs while others are committed to reducing their carbon footprint with environmentally friendly practices
How Can MSMEs Prepare For These Trends In 2024?
MSMEs should assess their digital capabilities, and pinpoint gaps in eCommerce, online marketing, and data management. They should allocate resources for software, tools, and equipment, favouring scalable, cost-efficient cloud-based solutions. Also, updating staff through online courses ensures they can effectively leverage new technologies.
Industry Collaboration and Partnerships Innovation driven by collaborative efforts among SMEs, industry players or large organisations propagates knowledge sharing, market expansion, and building mutually beneficial relationships that bring about growth. Trade associations offer mentorship and networking opportunities to help MSMEs stay competitive in the evolving market landscape. Moreover, business incubators provide valuable resources such as office space, mentorship, and funding to support MSMEs in implementing innovative practices and sustainable growth strategies.
Best Practices For MSMEs To Adopt In 2024
Some of the best practices that small businesses can do in 2024 are to grow their teams wisely to handle more work and get better results since hiring skilled professionals can bring fresh ideas and expertise to businesses. They should also consider upgrading their equipment to work more efficiently and produce higher-quality products.
Innovation is really important for MSMEs to thrive in this fast-changing world. It helps them be different, attract customers, and stay ahead of competitors. By creating new things or improving how they work, MSMEs can meet what customers want and work better. Innovation also lets them use new technologies and trends, which can help them grow.
Why People Are Not Adopting?
The majority of MSMEs hesitate to adopt the latest technology due to their lack of understanding and knowledge while selecting the correct technology solution for their enterprises, which affects their overall profitability. Such a situation is the result of a lack of skilled manpower to run high-tech machines and equipment, less trust in technology, and high capital investment for equipment.
Recommendations to Enterprises And Government For Enterprises
Assess digital capabilities and identify gaps in areas like eCommerce, online marketing, and data management. Plan and allocate resources for software, tools, and equipment, favouring scalable, cost-efficient cloud-based solutions. Update staff through online courses to ensure they can effectively leverage new technologies.
Explore industry collaboration and partnerships to foster knowledge sharing, market expansion, and mutually beneficial relationships. Actively participate in trade associations and business incubators to access mentorship, networking, and support for implementing innovative practices.
For Telugu States
Create more awareness amongst MSME entrepreneurs and enterprises about the benefits of technology adoption through trade bodies and industry associations through physical / webinars for the benefit of the industry. Help MSMEs understand the factors of transformation from conventional businesses to digitally active spaces.
Create awareness for MSMEs to leverage the 'Champions' portal, an ICT-based Internet Grievances Monitoring System, to facilitate MSMEs and assist them through all stages of the business cycle.
Incorporate Artificial Intelligence, Data Analytics, and Machine Learning in the 'Champions' portal to bring and tackle all grievances and suggestions under one stop to help MSMEs.
With the support of Govt of India, state governments should also help MSMEs to unlock new avenues for growth, enhance operational efficiency, and stay competitive in the evolving market landscape.
(Disclaimer: The opinions expressed in this article are those of the writer. The facts and opinions expressed here do not reflect the views of ETV Bharat)
