Need For Digital Transformation for MSMEs In India: Forvis Mazars Report There are a total of 63.39 million MSMEs in India with over 99 per cent of them being micro-enterprises contributing 30 per cent to the country's GDP and 45 per cent to its exports. Despite their major game play in the economy these enterprises remain significantly under-digitized.
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In India, Micro, small, and medium enterprises (MSMEs) sectors are the soul of its economy. They operate silently in the system but play a major role in generating employment for thousands of people, fueling production, and leading growth for various industries. There are a total of 63.39 million MSMEs in India with over 99 per cent of them being micro-enterprises. These small businesses play a crucial role in the economy, contributing 30 per cent to the country's GDP and 45 per cent to its exports. Additionally, they account for 36 per cent of the manufacturing output. Despite their major game play in the economy these enterprises remain significantly under-digitized.
Growing Need and Readiness Among MSMEs For Digitization
According to the report, in the period of COVID-19 pandemic, Indian MSME enterprises experienced growth in the digital landscape, majorly in the e-commerce sector, with MSMEs' share in online sales escalated from 12 per cent in 2018-2019 to 27 per cent in 2020-2021. This digital rise shows the growing need and readiness among MSMEs in adopting modern technologies. Also, in this timeframe, huge increment has been noticed in seller registrations on the major e-commerce platforms and intense activity on Government e-Marketplace (GeM).
MSME enterprises in India are highly under-digitized; only 12 per cent (7.7 million) successfully achieved digital maturity. The large number is still steering several stages of the digital journey. This highlights the critical need for Indian MSMEs to get transformed digitally which is beyond mere digitisation; it should be aligned with modern technological standards. Unlike digitisation, which is about turning paper-based processes into digital ones, digitalisation requires a complete change in how a business operates, integrating technology in every part of the business to improve how things work overall.
The report also emphasized the need for escaltering digital literacy in India by streamlining regulations, encouraging targeted investments, fostering public-private partnerships and adopting phased and strategic digital transformation.
Government Initiatives Supporting Digitalization
Additionally, the report also highlighted several government initiatives that are helping and escalerting digitalization in the country including Unified Payments Interface (UPI), Account Aggregator (AA) Model by RBI, Trade Receivables Discounting System (TReDS) by RBI, and Open Network for Digital Commerce (ONDC).
Along with these initiatives, the Ministry of MSME has also launched several programs and schemes designed to enhance the digital skills of small-scale enterprises. These initiatives aim to simplify and speed up the processes involved in running an MSME, from the initial registration of the business to its eventual expansion. Particularly, skill development programs helped in efficiency and data-driven decision-making, with a critical focus on complete digital literacy which is a central to the digitalisation efforts. These insights are based on Forvis Mazars in India report, "Designing a Digi-Ready Docket for MSMEs".
