Know how to revive MSMEs with this online convening of eminent stakeholders
Micro, Small and Medium Enterprises (MSMEs) are the cornerstone of growth for the Indian economy, contributing nearly 25 percent towards India’s services GDP and 33 percent towards the total manufacturing output. They also generate significant employment in the country. Nearly six crore MSMEs employ approximately 11 crore people, forming nearly 40 percent of India’s non-farm workforce.
However, with the onset of the COVID-19 pandemic, MSMEs have had to face immense challenges to their operations. A regular supply of credit is essential for the functioning of MSMEs, and after the disruption in liquidity due to the pandemic, around 57 percent of micro-enterprises have no cash reserves, while 65 percent have had to dip into their personal savings to manage operations. According to a GAME-led micro enterprise survey, nearly 40 percent of MSMEs have already attempted to borrow money to survive, with only 14 percent borrowing from formal sources.
MSMEs are also having to cope with a loss in domestic and global demand. According to a FICCI MSME Survey, about 73 percent of MSME businesses have reported a drop in orders and 50 percent indicated that inventory levels were up by more than 15 percent. In light of these challenges, estimates suggest that 30‒40 percent of MSMEs in India may cease to exist as the COVID-19 pandemic drags on.
Structural changes and policy intervention — the need of the hour
Even before the onset of the pandemic, a vast number of MSMEs were unable to formalise their operations or be cost-competitive, despite the fact that firms which start out formal are two to three times more productive and have a better chance of growing. Nor were they able to achieve high levels of growth and productivity.
To ensure the survival of the sector through these critical times, and eventually get it to revive and thrive, structural changes and policy intervention is the need of the hour. And to bring these changes to fruition, it requires efforts from all stakeholders of the sector.
To achieve these objectives, an ‘MSME Transformation Task Force’ was constituted by Ravi Venkatesan, Founder of the Global Alliance for Mass Entrepreneurship (GAME) and chaired by Dr. K. P. Krishnan, Former Secretary, Ministry of Skill Development and Entrepreneurship, Government of India.
The task force was constituted at an event attended by the Union Minister for MSMEs, Nitin Gadkari, and the Chief Ministers of Punjab, Karnataka, and Meghalaya. Its members include Ankit Agarwal, Partner, McKinsey & Co; Amit Basole, Professor, Aziz Premji University; Anand Deshpande, Founder and Chairman, Persistent Systems; Bharath K. S, Founder, Poornatha; Ramesh Mangaleswaran, Senior Partner, McKinsey & Co.; Piyush Munot, Director, Varsha Forgings; Radhika Pandey and Amrita Pillai, Economists at the National Institute of Public Finance and Policy; Sanjiv Puri, Chairman and MD, ITC; Sangita Reddy, Joint MD, Apollo Hospitals; Manish Sabharwal, Chairman, Teamlease Services and Srinivasan S.C, CFO, Bosch India
A roadmap to sustain and thrive in the long term
A report, titled ‘Improving Economic Dynamism and Accelerating MSME Growth’ was also released by the task force for policymakers, industry leaders and industry associations who seek to foster mass entrepreneurship and inject dynamism into the MSME sector.
The report outlines key recommendations to strengthen MSMEs, ranging from short-term fiscal relief measures to “Survive”, to medium-to-long-term structural reforms to “Revive” the sector and help them “Thrive”. It also proposes an actionable operationalisation plan, along with metrics to track and measure success, so that the benefits for the MSME sector can “Sustain” over several years.
To spread awareness around these strategy recommendations among all relevant stakeholders, GAME National Task Force for MSMEs is presenting ‘The MSME Transformation “Dynamic India” Convening’ supported by Facebook and powered by YourStory on July 15, 2020. Prominent stakeholders of the sector will share their insights to chart a pragmatic and specific action plan to tackle issues such as liquidity, ease of doing business, and compliance concerns, among others, that affect the sector.
Bringing all stakeholders together to ignite change
The multi-track online convening will commence with a welcome address by Ravi Venkatesan, Founder, GAME, followed by highlights from the report that will be provided by Dr. K.P. Krishnan, Former Secretary, Ministry of Skill Development and Entrepreneurship, Government of India, and a keynote from an eminent speaker that will set the context on the strategic way forward to improve the competitiveness of MSMEs.
This will be followed by a panel chaired by Anjuly Chib Duggal, Former Secretary, Department of Financial Services, Government of India, which will focus on strategies to ensure that sectors and enterprises with strong fundamentals can access liquidity to keep their businesses alive.
To discuss strategies that will improve the ease of doing business for MSMEs, a panel chaired by Manish Sabharwal, Chairman, TeamLease Services, will share insights on creating an enabling business environment for MSMEs to bounce back from the downturn.
To capitalise on the vast potential for MSMEs to grow through exports, a panel chaired by Ramesh Mangaleswaran, Senior Partner, McKinsey & Company, and consisting of Srinivasan Srini, CFO and Executive Director Bosch India, among others, will identify the policy and enterprise enhancement mechanisms that would make India a global exporter.
The creation of new enterprises, the growth of existing ones, and an increase in the number of women-owned businesses can be accelerated by fostering a dynamic entrepreneurship culture in the country. To that end, the final panel, chaired by Mekin Maheshwari, Co-Founder, GAME and Founder, Udhyam Learning Foundation, and consisting of Dan Isenberg, CEO, Entrepreneurship Policy Advisors, among others, will share their suggestions on ways of bringing about such a culture in the country.