The Micro, Small and Medium Enterprises (MSME) sector is contributing significantly to the country’s GDP. These enterprises are provided extra support by the government in the form of various schemes and funds so that the country’s economy follows an upward trend. We know that the pandemic has slowed down the progress and MSMEs are badly hit. The lockdowns pushed many small businesses to shut down. Lack of sales, funds and human resources during the pandemic was a huge setback to the MSME sector. There are more challenges that the Micro, small and medium enterprises face, pandemic or no pandemic. Let’s discuss the major challenges faced by the MSME sector in India:
1. Financial challenges faced by the MSMEs in India
MSMEs not only provide support to the Indian economy but also help generate employment opportunities. Most of the time, it is the financial challenges that top the hurdles faced by the MSME owners. In India, the people who are handling MSMEs are generally from poor and uneducated backgrounds. They are unaware of the opportunities provided by the government to support MSMEs. The lack of financial expertise makes them suffer and their small businesses struggle hard to survive.
2. Lack of skilful workforce in MSMEs in India
In India, to hire low-wage labour, the employer ignores the skills required to run the business. As a result, the low skilled people manage the business leaving a little prospect for development. The MSME owners hardly take any effort to train their employees. It leads to the degradation of the reputation of the enterprise which further translates to low outputs.
3. Most Indian MSMEs are Unaware of digitisation
MSMEs are called the Backbone of India because they contribute over 8% to the nation’s GDP and over 45% to the total manufacturing output. MSMEs in India also contribute more than 40% of India’s total exports. Despite this, Indian entrepreneurs are proud to stay away from digitisation. The MSME owners continue to use the age-old methods of doing business without any ambition to match global standards. The outdated methodology combined with the unskilled workforce exhibits an ugly portrayal of Indian MSMEs.
4. Insufficient and incompetent marketing
In the era of social media and digital marketing, many MSMEs in India believe in the manual dealing of commodities. The reason can be superstitions, lack of knowledge of advanced technology or scarcity of financial sources. Inadequate understanding of the advanced modes of marketing is a huge drawback. No matter how good your product is, if marketing fails, your business is bound to collapse.
5. No knowledge of the global market
Indian MSME owners are unaware of the strategic approach used by their global competitors. They manage their businesses to trade only within the local community. While their global competitors plan to reach for the skies, our Indian entrepreneurs don’t want to come out of the local coop. They do suffer. This difference needs to be minimised so that Indian entrepreneurs stand at par with their competitors in the global market.
6. Ease of doing business is an illusion
India has secured a respectable place in the World Bank’s ‘Ease of doing business’ index report. It means that starting a business in India should be rather effortless but honestly, it is not. From applying for a loan to getting licenses, MSMEs experience a lot of difficulties. The complicated process discourages people, sometimes to the limit of quitting the idea of starting a new business.
Challenges should not deter you from venturing into the MSME sector. Join the communities and help centres that cater to the requirements of starting micro, small and medium enterprises(MSMEs).
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