MSMEs Expect NDA-II to Frame Industry-friendly Policies & Programs
Lack of digitization, credit availability, timely funding opportunities and regulatory compliance blockages are among the grave issues of MSMEs
India has chosen the reigning Prime Minister Narendra Modi-led NDA government as the key decision maker for another five years and the shareholders of all industries are cheering over the big win. From corporate veterans like Anand Mahindra and Harsh Goenka to the startup community and shareholders of MSME sector, all have high expectations of NaMo 2.0.
Regarded as the backbone of Indian economy, the Micro, Small and Medium Enterprises (MSMEs) while faced a downer due to demonetization and the implementation of GST (Goods and Services Tax), have moved past the little roadblock and now view the economic reforms in a new light, a brighter one at that.
MSMEs hope for the new government to address their pain points to build a conducive environment for them to work in. More so, as Vijay Mansukhani, the Managing Director of Mirc Electronics Ltd rightly put it, "Invite suggestions from industry and jointly make policy decisions." Now, while that could be too much to ask, the government can consider recommendations from RBI's Expert Committee on MSMEs.
A majority of the MSME community is built over the exporters' drive to ship Indian commodities outside. Lauding Modi's much-appreciated scheme - "Make in India', Mansukhani advises for the new government to take the policy more seriously and stop Free Trade Agreement which is helping Chinese companies to export goods to India from Vietnam and Thailand.
"Increase custom duties to prevent imports," he further suggested. Modi's consistent foreign visits were meant to ensure good trade relationships with other countries, which according to Sunu Mathew, the Managing Director of LEAP India is the key to the progress of MSMEs in the country. We have already been on the path of global exposure but now, the focus should be on easing the path for MSMEs.
Adding on, Ankit Gupta, the Vice President of ExportersIndia.com stated, "Private investment and consumption would be two key facets that would need some fast paced working to set the economy ticking. MSMEs look forward to the liberalization of policies so that they are able to innovate, invest in new technologies and equip themselves to adapt to the changing business environments."
Among the biggest setbacks for MSMEs, the traditional operational outlook has caused the most harm. With corporates digitizing their ways and startups bringing innovative solutions, additional measures to improve corporate productivity of the sector should be among the top priorities, so should the reforms to ease the way business is done.
Up-skill & Employ
While we are at the topic of digitization, let's not forget the ramifications artificial intelligence would have on the employment, when is fully accepted by India's business ecosystem. Digitization would improve efficiency, yes but what about the talented individuals who'd be out of jobs? A conducive business environment can only be created when the talent is available in abundance.
For such high targets to be achieved, "Policy and infrastructure for Up-skilling, re-skilling and improving the ground-level education in consonance with building capability on disruptive technologies like AI, ML, and data science have to be developed," suggested Siddhartha Gupta, the CEO of Mercer|Mettl. The government needs to author a more transparent and accurate measure of Job creation.
The cut-throat competition and now the scare of AI taking over measly human jobs are enough factors for the government to increase their employment efforts. "The overall confidence among consumers should go up with the increase in employment generation and more employment opportunities for existing employees," Mathew affirmed.
The lack of credit availability has been one of the key pain points for MSMEs. NDA has proved to bring significant improvements through structural and economic reforms in the last five years. "The credit crunch has been somewhat eased and loans are now readily available for MSMEs thereby, creating a conducive environment for their growth," provided Saahil Goel, the CEO & Co-founder of Shiprocket.
The vision of India Stack has become well-defined and distinct in its scope and financial services should continue to be a huge area of operations, Alok Mittal, Founder & CEO, Indifi Technologies added on. He expects the new government to define concrete steps to mobilize access to financial services and empower the fintech companies that facilitate them.
Providing an instance, he stated, "Extending credit guarantee schemes such as MUDRA and facilitating better data access to alternate lending companies can help in bolstering the impact and reach of these initiatives. Doing so can ensure a step closer to financial inclusion and high growth potential for MSMEs in India."
While the government's intentions are in the right place, he expects the government to introduce more well-evaluated and specific purpose-driven initiatives, streamlined regulatory mechanisms, reduced tax rates and enhanced tax exemptions. "The future definitely looks bright for the digital ecosystem and the MSMEs during the next five years."
The good and services tax implemented during the first term of Modi government might have proved to pain for the MSMEs in its initial phases but the community has come to accept its benefits in the long run. Sameer Vakil, the co-founder & CEO of GlobalLinker has accepted that NDA-I had worked to address many fundamentals of the economy and business environment by introducing reforms like GST.
"I would expect NDA-II to frame policies and drive programs to help Indian MSMEs, take their rightful position in the global economy. The policies should encourage new age businesses to be set up and should remove business irritants. There should also be an improvement in access to financing and credit cycles for SMEs," he stated.
Speaking about the issues MSMEs have faced due to GST, Saania Singh, the Co-founder of Zero Gravity Aesthetics stated that it is important to consider the voice of companies and other stakeholders because "Government policies and their implementation have always played an important role in how different businesses fare in the market."
"It is no secret that GST has led to the extreme shortage of working capital, to combat which there is no backup plan in place," she complained. She intends to pitch for increased uniformity in the financial reform and the rationalization of GST into two slabs or at max three slabs for easing out of its compliance-related blockages.