Indian MSMEs Cite Inability To Access Markets, Retain Customer’s As Top Challenges Faced

New Delhi, Oct 10 (KNN) A majority of MSMEs cited the inability to access markets, retain customers, and effectively market their products as the top challenges faced by them, according to a report by Indian Council for Research on International Economic Relations (ICRIER).

However, leveraging platforms to enable MSMEs to expand access to markets and grow their businesses requires an enabling environment in the form of the right policy support from the government, it added.

The ICRIER report unveiled on Monday surveyed a total of 2,007 micro, small and medium enterprises (MSMEs) between November 4, 2022, and January 20, 2023. Of the total sample, 65 per cent of the firms were micro in size, 19 per cent were small, and the remaining 16 per cent were medium.

The reports point out that a higher share of export-oriented MSMEs are found to be integrated with e-commerce platforms compared to firms that do not export. “The MSMEs which adopt e-commerce platforms as a sales channel, tend to be owned by younger and more educated individuals,” it showed.

On average, integrated MSMEs appear to be better off than non-integrated firms on key performance indicators, such as turnover, profitability and share of employment benefits. At the time of the survey, 1,005 enterprises were already integrated with e-commerce platforms, while the remaining 1,002 were not integrated.

The survey findings suggest that integration with e-commerce platforms not only enables MSMEs to improve their access to the market but also access to finance, thereby alleviating critical barriers to their growth. “Thus, for MSMEs to be effective engines of inclusive growth, their digital transformation must be a priority,” the survey highlighted.

Apart from challenges pertaining to access to markets, surveyed MSMEs also indicated several other challenges relating to physical infrastructure bottlenecks, lack of access to credit and skilled labour and problems of delayed payments. To address these bottlenecks, the central and state governments have put in place various schemes that provide financial assistance, access to technology and upgradation facilities, infrastructure development, skill development and training.

These include Emergency Credit Line Guarantee Scheme, Credit Guarantee Fund Trust for Micro and Small Enterprises, the Credit Linked Capital Subsidy Scheme (at the central level), the MSME Sarthak Scheme (Karnataka), Uttar Pradesh government’s One District One Product (ODOP) scheme and the Rural Craft and Cultural Hubs (West Bengal), among others.

The respondents strongly felt that there is a need for consolidation and rationalisation of the schemes. MSMEs also highlighted the importance of effective coordination between the central and state governments and the significance of having a comprehensive MSME policy that will allow such firms to find policy incentives and programmes in a single place.  (KNN Bureau)