COVID-19 Has Triggered Urgency For MSMEs: Cisco's Bidhan Roy
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In addition to being a global health crisis, the COVID-19 pandemic has unleashed extensive socio-economic impacts, putting millions of companies worldwide at the risk of being forced out of business. The crisis has hit small businesses—classified as micro, small and medium-sized enterprises (MSMEs)—and their workers particularly hard. Now, they urgently need support to survive. Many governments and multinationals are taking extraordinary steps to minimize the negative impacts of the novel coronavirus on business operations and workers, but much more action is needed.
How many MSMEs does India have, who owns them and where are they situated?
According to the latest available (2018-19) government data, there are 63.4 million MSMEs in the country. Around 51 per cent of these are situated in rural India. Together, they employ a little over 110 million people but 55 per cent of the employment happens in urban MSMEs.
MSME sector in India is the second largest employment generator after agriculture, and acts as a breeding ground for entrepreneurs and innovators with considerable support in strengthening business ecosystems. According to The Times of India, the estimated number of MSMEs in India is 63 million and employs 110 million individuals. Indian MSMEs produce more than 6,000 products for local and global consumption. While micro enterprises are equally distributed over rural and urban India, small and medium ones are predominantly in urban India. In other words, micro enterprises essentially refer to a single man or a woman working on their own from their home.
According to Bidhan Roy, managing director and head of commercial and small business, Asia-Pacific, Japan and Greater China, Cisco, the pandemic has altered and changed the way of midsize enterprises operate.
What kind of problems do MSMEs in India face?
Given the shape and form of MSMEs, it is not hard to envisage the kind of problems they would face.
To begin with, most of them are not registered anywhere. A big reason for this is that they are just too small. Even GST has its threshold and most micro enterprises do not qualify. This apparent invisibility tends to work for enterprises as well as against them. Being out of the formal network, they do not have to maintain accounts, pay taxes or adhere to regulatory norms, etc. This brings down their costs. But, as it is clear in a time of crisis, it also constrains a government’s ability to help them. For instance, in some of developed countries, the government has tried to directly provide wage subsidy and extra credit to smaller firms but that could happen because even smaller firms were being mapped.
Impact of COVID on the realm of small businesses
"This pandemic, of many things it has done, one thing—and I would probably take it across in a very positive way—is that it has become a big level up as it has impacted all in a pretty significant magnitude," said Roy.
It changed how we work, it changed our business strategies in terms of how we go out to market, what customer needs are, it has changed how we learn, it has changed how we interact with our customers be it digital transformation or employee transformation or customer transformation.
"The significant advantages or opportunities it brings out actually could have taken close to a decade which happening in weeks now,” exclaimed Roy.
India is absolutely at the forefront of adoption of AI robotic process automation in companies in some form or shape, which was very pleasing to know, he added.