OVER THE PAST decade, despite a global pandemic, an economic slowdown, and geopolitical concerns, India has emerged as one of the fastest-growing economies in the world. This is reflected in the country's high GDP growth rates.
The growth of India's micro, small, and medium enterprises (MSME) segment has been a strong driver of the country's economic expansion-they contribute 33% to India's GDP (in 2019) and make up 45% of total exports (in 2023). MSMEs are also a leading employment generator, presently employing 110 million people.
The MSME segment is a cornerstone of India's vision of becoming the third-largest economy by 2027 and Viksit Bharat by 2047. However, there is a need to address some structural challenges faced by this segment to harness its potential.
MIRED IN CHALLENGES
Compared to larger corporations, MSMEs have limited access to capital and lesser in-house technical capabilities. It is challenging for them to invest in advanced digitisation and automation. Their dependence on manual operations creates functional challenges around consistent quality control and higher cost of production.
Complex regulatory and compliance requirements add further pressure on this segment. The government has already undertaken several policy reforms to ease these challenges. For example, the recently-introduced account aggregator framework will enable easier access to credit.
These challenges can best be navigated through technologies specially curated for MSMEs.
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