The significance of the MSMEs sector can be noted from the fact as of FY18, there were about 630.5 lakh micro enterprises, about 3.3 lakh small enterprises and over 5000 medium enterprises. These MSMEs provide employment to approximately 124 million people.
Broadband: Impacting MSMEs significantly
Broadband has shown significant growth in India, and according to TRAI as of March 2020 there are approximately 687 million broadband subscribers in India. As a result of India’s growing broadband infrastructure, an ecosystem to usher India’s large MSME sector into the digital economy has also developed. Today’s broadband-supported tools are enabling MSMEs access to and easier management of information technologies (IT). These tools are offering new ways to communicate and reach customers. The size and dynamic nature of MSMEs can enable such businesses to take advantage of technological progress while minimising risks. The key, however, is for MSMEs to not only adopt, but also to effectively plan, implement, maintain, and manage the broadband-supported technological evolution.
The following key themes are emerging across the MSMEs:
1. Access to a larger customer/market base: Broadband enabled e-commerce and marketplaces have enabled MSMEs to expand their customer and market base at significantly lower costs
- For example, food delivery startups have enabled every food outlet to grow its customer base and scale up business. They are also establishing delivery kitchens, also known as cloud kitchens
- Similarly, marketplaces or business listing platforms for MSMEs, have expanded the customer base for MSMEs for B2B businesses. These platforms also offer value added services such as lead management system, payment protection and facilitation services and services like BI/dashboarding with pay per lead model
2. Access to cost-effective solutions for operational efficiency and competitiveness: Versions of standard suite of enterprise application (for example, CRM, ERP, HR, Analytics, etc.) are now available to MSMEs by new-age start-ups via cloud. It is the availability of high-quality broadband which has enabled this ecosystem
- New age startups are offering easy to use and cost-effective solutions for MSMEs across value chains such as customer service, sales management, marketing, communications management
3. Access to financials and payments solutions:
- Similar to availability of cost-effective solutions, multiple start-ups bring the benefits of online commerce to manufacturers, traders, suppliers, wholesalers, especially in smaller towns
- UPI, developed by the National Payment Corporation of India, regulated by the Reserve Bank of India, facilitates instant real-time payments
Broadband: enabling startup ecosystem
Indigenous technology startups act as a major booster for the development and progress of the Indian economy while simultaneously delivering affordable and convenient services. Broadband has been central for propelling the growth of a number of successful start-ups in ed-tech, food delivery, e-commerce, etc. The Indian government has facilitated these growth opportunities by enabling the technology ecosystem for start-ups. IndiaStack provides a set of operating APIs based on Aadhar and UPI systems that startups can utilize to solve problems towards presence-less, paperless and cashless service delivery.
As a result, India has the third largest startup ecosystem in the world and is expected to witness a consistent YoY growth of 12-15 percent . According to a Nasscom report, India added 8,900 – 9,300 technology led startups in 2019, up from 7,700 – 8,200 a year ago. Startups in the country have been able to create an estimated 60,000 new jobs in 2019, taking the total direct jobs in the startup ecosystem to 1.6-1.7 lakh.
Sathish Gopalaiah is Partner and Telecom sector leader and Gunjan Gupta, Director, Deloitte India.