Tech giants can provide seed funding, mentorship to SMEs: Krishnamurthy Subramanian at Amazon Smbhav Summit 2021
"SMEs age but they don't grow," said Dr Krishnamurthy Subramanian, currently the Chief Economic Advisor to the Government of India, on Day 2 of the Amazon Smbhav Summit 2021 in conversation with Raghava Rao, Vice President Finance and India CFO, Amazon India.
Dr Subramanian said that while the SME sector is the backbone of the Indian economy, it is struggling from a phenomenon called "dwarfism."
He further added that the Indian manufacturing sector has immense potential in terms of creating jobs, and the promoters of these organisations should realise that when they grow the firm, they are not just benefiting themselves but also contributing to the nation by creating jobs," he added.
He further added that the government has taken several measures to ensure ease of doing business for these small and medium enterprises — including changing the definition of MSMEs, which ensures that the firms don't stop growing just because of the benefits associated with being of a particular size.
He also added that economies of scale are important because they result in cost reduction as well as enable global competitiveness.
Role of technology
"Technology is a great enabler for productivity gains," said Dr Subramanian, adding that research suggests that digitising the inventory management can improve the efficiencies of the production floors. He also said that it is vital for SMEs to reap the umpteen benefits of technology.
He also highlighted that the role of tech giants and larger companies is accelerating technological upgradations among the small and medium enterprises, "I think Amazons of the world can provide initial funding or seed funding to SMEs, and also mentor them on the kind of technologies that can be implemented."
Building grassroot entrepreneurship
Dr Subramanian said that when people think about entrepreneurship, they typically think of cities like Hyderabad, Bengaluru, Mumbai, Delhi, etc. "While it is true that they hold a greater share, but we collected some data from the Ministry of Corporate Affairs and World Bank which showed firms are spread across 500 districts in India. And this map does not look dense on the four metropolitan cities but it is actually spread out very well."
He said that the rate of entrepreneurship has gone up. "What is even more heartening is that India has over 100 unicorns, that have been created just by the sheer merit of the idea, not because of political connections or otherwise, or because of dynastic succession."
In its inaugural summit, Amazon also announced a $250 million (around Rs 1,873 crore) fund that will focus on digitising small and medium businesses and drive innovation in the areas of agritech and healthtech.