MSME Must Capitalize Opportunities that Lie Beyond Pandemic

MSMEs are drivers of socio-economic development in India and key influencers in urbanizing rural India. There are 63 million MSME units spread across the length and breadth of the country providing employment to 120 million people —nearly 40% of India's workforce. Currently accounting for 30% of GDP and 40% of total exports, MSMEs are the engine that will power India to its GDP USD5 trillion ambition.

- Amit Bhatia

In the recent past SMEs Isector has been subject to strong headwinds – a slowdown in economic growth, the NBFC liquidity crisis, downturn in the automobile industry – leading to immense survival challenges. As if this was not enough, a further shock in the form of the COVID-19 pandemic and the resultant country-wide lockdown, could result in huge losses for this segment and the shuttering of many units in the absence of a market, liquidity and labour.

In this gloomy scenario comes a ray of light in the form of the economic stimulus measures announced by the Finance Minister, resting on the five pertinent pillars of Economy, Technology, Infrastructure, Demographics and Demand, these announcements are likely to spur growth and inject a fresh lease of life in MSMEs. Of particular significance are the measures aimed at the MSME sector which is expected to revive the “animal spirit” of the small Indian entrepreneur whose dreams were shattered due to the lockdown.

Opportune Time

The significant change in the definition of MSME has positive implications and fulfils a longstanding structural demand of the sector, as the definition had remained constant since the MSME Development Act of 2006. The fear of growing out of the MSME sector and resultant loss of benefits and incentives had hampered the growth plans of many an entrepreneurs.