MSME sector significant job creator and backbone of Indian economy

The MSME sector is a significant job creator and backbone of the Indian economy as it accounts for more than 40 per cent of India’s exports, and contributes nearly 30 per cent to the country’s GDP.

The sprawling MSME sector in India may find a natural ally in the e-commerce sector for exports, as e-commerce supply chains enable a seamless-hasslefree experience for small businesses. Experts at a webinar, ‘Boosting exports by empowering MSMEs’, which was held by the Federation of Indian Micro and Small and Medium Enterprises agreed that e-commerce exports enable a B2C exports model wherein exporters register themselves on the e-commerce marketplace locally and sell globally.

Piyush Srivastava, Additional Development Commissioner – Ministry of MSME, pointed out that exports will only come about if there is a competitive product. He believes that there is a need for adequate capacity to satiate the domestic market and then to export. “Product diversification and quality of products is necessary to boost exports. Awareness, belief, promotion and growth are important pillars to boost growth.”

Sabina Dewan, President and Executive Director of JustJobs Network, said small businesses are the backbone of the Indian economy. “MSMEs cannot be successful without employment. Small businesses are least able to withstand shocks,” she said. “The pandemic is one shock while technology technology is another. It is imperative to prioritize employment and in turn MSMEs, when rebuilding the economy. MSMEs that have savings and been able to access technology are the ones that have been able to withstand these shocks.”

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Arpita Mukherjee, Professor – Indian Council for Research on International Economic Relations, highlighted that the world has faced a recession in terms of trade in recent times. He said exports have contracted. “MSMEs constitute the bulk of trade thereof, it is important to incentivize them. Institutional incapacity, high interest rate, logistics etc have been impediments for exports to grow,” the professor said. “The problem was prevalent before COVID-19 and got accentuated with the pandemic. With the use and purchase of technology, MSMEs would be able to lobby with the government to provide incentives which would help in bolstering productivity.”

Nirupama Soundarajan, Head of Research at Pahle India Foundation, said geopolitical overdependence on any one country is not good for economic growth, therefore it is important to diversify both imports and exports. “When it comes to ease of doing business, we look at it in a silo and look at one sector without considering the value chain.” Giving the example of e-commerce as an enabler, Soundarajan said there is a need to enable e-commerce in the regulatory aspect, as well as enable logistics. “We make the mistake of looking at the ease of doing business in a myopic manner when it needs to be all encompassing.”

Soundarajan believes e-commerce offers access like most channels cannot. E-commerce does away with these challenges and allows MSMEs to test waters in different markets through consumer feedback. It allows small businesses to sell directly to consumers and sell volumes suitable to them.