MSME Sampark Report Highlights Post-Pandemic Recovery And Digitalisation Trends

New Delhi, Oct 14 (KNN) Dun & Bradstreet, in collaboration with UGRO Capital, has released the second edition of the MSME Sampark report, shedding light on the pivotal role of micro, small, and medium enterprises (MSMEs) in India's economic landscape.

The report, which analyses over 39,000 MSMEs across seven key sectors over a three-year period, reveals that the MSME sector contributes nearly 30 per cent to India's GDP and employs over 150 million people.

The study indicates a strong recovery trend for MSMEs post-pandemic, with more than half of the sampled businesses recording over 10 per cent year-over-year growth in sales from May 2021 to March 2024.

This recovery aligns with India's overall economic performance, as the country experiences a steady GDP growth rate of 8.2 per cent in 2023-24, positioning it among the fastest-growing major economies globally.

The report emphasises the importance of formalisation and digitalisation in enhancing MSMEs' access to credit and growth opportunities.

It notes an increase in borrowings by MSMEs, primarily through collateralised loans, reflecting lenders' confidence in their resilience and potential.

This trend underscores the need for timely and affordable working capital for these businesses.

Shachindra Nath, Founder and Managing Director, UGRO Capital, highlighted the significant role of non-banking financial companies (NBFCs) in bolstering MSME growth.

He noted a 15 per cent compound annual growth rate in assets under management over the past five years, attributing this to NBFCs' ability to reach underserved markets with tailored financial solutions.

Avinash Gupta, Managing Director & CEO – India, Dun & Bradstreet, pointed out that while MSMEs contribute around 30 per cent to India's GDP, their share in non-food credit remains relatively low at approximately 6.0 per cent in FY24.

He emphasised the importance of government initiatives aimed at digitalisation and incorporating MSMEs' digital footprints into credit decisions to enhance their access to credit, technology, and markets.

The report covers seven sectors including Light Engineering, Food Processing, Electrical Equipment, Chemicals, Auto Components, Hospitality, and Healthcare.

It reveals that credit penetration appears healthy across all sectors, with Light Engineering being the dominant sector, followed by Electrical Equipment and Food Processing.

Despite elevated interest rates, credit growth to MSMEs remains strong. The growth in credit by scheduled commercial banks to micro and small businesses stood at 14.7 per cent, and to medium businesses at 13.3 per cent, outpacing the growth in credit to large industries at 6.5 per cent.

The study also highlights the rapid formalisation of small businesses, as evidenced by the number of MSMEs registering on the UDYAM portal nearly doubling every year since its launch in FY21.

Additionally, the report notes an increase in the ticket size of large loans taken out by MSMEs, rising from 24 per cent in FY21 to 40 per cent in FY24.

Women entrepreneurs are making significant strides in the MSME sector, accounting for 20 per cent of total MSMEs registered on UDYAM.

This share increases when considering Informal Micro Enterprises (IMEs), with more than 71 per cent owned by women as of January 2024.

The report concludes by mentioning the government's continued focus on MSME development, as reiterated in the Union Budget for 2024-25.

This comprehensive package includes funding, regulatory changes, technology support, and initiatives for women entrepreneurs, aimed at further supporting the formalisation of MSMEs and improving their access to credit and markets.

(KNN Bureau)