Emerging technologies reshaping the future of Indian MSMEs
Technology and strategic planning are key to unlocking the full potential of India's MSME sector and ensuring its enduring success in the global economy.
India's vibrant MSME sector, with over 633 million enterprises, stands at a turning point. Automation and AI promise to revolutionise this area, offering unprecedented growth.
However, challenges like potential workforce displacement and the need for reskilling must be addressed to navigate this dynamic landscape and unlock the full potential of MSMEs.
The Powerhouse of Indian Economy
MSMEs are the backbone of India's economic growth, contributing significantly to GDP around 30%, over 35% in manufacturing output, 40-45% in exports, and employment to over 110 million people.
Despite their significance, the sector often struggles with resource limitations, scalability issues, access to capital, and skilled labour which have historically hindered their progress. However, fintech companies are now bridging these gaps with innovative solutions, enabling exponential growth and financial inclusion.
Empowering MSMEs with a Digital Toolbox
Fintechs play a crucial role by equipping MSMEs with a digital toolkit such as HR solutions to manage payroll and onboarding, accounting software which automates finances, inventory systems to optimise stock, project management tools which keep teams on track, and communication apps that connect everyone.
Big data analytics helps businesses understand market trends and consumer behaviour. Ecommerce platforms break down geographical barriers, providing access to a global customer base.
Credit Facilitation: Fueling Growth
Access to timely credit is critical for MSME success. Government initiatives like 'Atmanirbhar Bharat' and 'Make in India' aim to strengthen the sector, as evidenced by the surge in UDYAM portal registrations. Fintechs and NBFCs are leading the lending revolution with innovative solutions, further boosting efficiency and growth.
Automation and AI: A Double-Edged Sword
Automation and AI are poised to transform MSMEs by streamlining operations, enhancing productivity, and reducing costs. Automation can handle repetitive tasks, freeing up human resources for knowledge-based roles. AI can provide valuable insights through data analytics, enabling informed decision-making and personalised customer experiences.
However, automation could displace approximately 23% of jobs in India by 2025, according to a World Economic Forum report. This underscores the need for proactive reskilling and workforce adaptation.
Despite concerns over job displacement due to automation and AI, there's a promising perspective that emerges.
AI could not only enhance efficiency but also pave the way for new job opportunities, especially for those skilled in harnessing its potential. 51% of Indian professionals surveyed by PwC believe that AI will increase their productivity at work.
This underscores the potential for AI and automation to complement human capabilities, fostering innovation and economic advancement globally. With the right skills and adaptation, AI promises a future of expanded possibilities rather than diminished prospects.
Reskilling and Lifelong Learning: The Imperative
As automation and AI transform businesses, reskilling the workforce becomes imperative. The future workforce needs digital literacy, data analysis skills, and an understanding of AI and machine learning. Lifelong learning should be institutionalised, promoting a culture of continuous skill development.
Governments, academia, and industry must collaborate to create comprehensive training programs. The Indian government's Skill India Mission is a step in the right direction, aiming to train over 400 million people in various skills. Such initiatives need further expansion and tailoring to address the specific needs of the MSME sector.
Collaboration: Building a Supportive Ecosystem
The successful integration of automation and emerging technologies requires collaboration. Governments can provide policy support and incentives, academia can offer research and training, and industry can drive innovation and implementation.
Partnerships between MSMEs and technology firms can facilitate the adoption of tailored solutions. Additionally, creating a supportive ecosystem with access to funding, infrastructure, and mentorship is crucial.
Conclusion: A Thriving Future
The future of Indian MSMEs lies in harnessing the power of automation and emerging technologies. These advancements offer unmatched opportunities for growth and efficiency. A proactive approach to reskilling and lifelong learning is essential.
By building collaboration between government, academia, and industry, India can ensure that its MSMEs not only survive but thrive in the age of automation.
Strategic planning and a focus on inclusive and sustainable growth are key to unlocking the full potential of India's organisational sector and ensuring its enduring success in the global economy. Embracing technology is not just a necessity; it's the pathway to unlocking the potential of India's vibrant MSMEs.
(Kumar Shekhar is the Deputy Country Manager & SVP Member Operations at Tide-India.)
Edited by Jyoti Narayan
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)