By Winny Patro, CEO & Co-Founder, Recodent
MSMEs have played a crucial part in shaping the country’s economy in the past and present. Especially, when the COVID-19 pandemic induced a downfall in the economy, it was the MSME sector that contributed immensely to India’s economic rebound. The growth engine of the country, earlier that was set in traditional methods, has now well-adopted tech. There are some great expectations from the SME industry, this year and the next few to come.
The MSME industry in itself has shown signs of growth and has bounced back with tech developments to support them. When the pandemic first hit, the industry was grappling to ensure operations despite the lockdown. In a short span of two years, the revival and fast growth have put MSMEs at the forefront, leaving them with great expectations to fulfill, as they have new tech in their power to bring radical change to India’s economic performance.
Here are some of the SME trends in 2022
Data backed decision making
The adoption of technology in the MSME sector has shown businesses that the right and intelligent decisions are made with facts. In their case, data and analytics easily display the insights that will prove to be crucial in making sound business decisions. Hence, the year 2022 and beyond will largely witness further tech adoption for making the most thought of and planned business activities. Technology is more accessible than ever, and the trends display that SMEs are here to completely revamp the way they conduct their businesses.
New and improved cash flow
For a long time, MSMEs were faced with a financial crunch that was a major hindrance to growth. Disrupted or delayed payments are a single factor that derails the progress, and sometimes even the day-to-day operations of a small business. With tech, SMEs will now be able to track their stuck payments, send easy reminders, and further use a tech-friendly accounting or management system that helps them plan finances, and crucial business aspects well in advance. Once a business cracks a healthy and timely cash flow, they are in a much better position to conduct business and ensure timely growth.
Organised finances and support
The MSME industry is on a successful path to growth and by using technology to aid their business activities, the MSME sector will begin to see a growth in its capital. Acquiring loans and seeking investment will become easier and more rewarding with the right use of technology to maintain their records, and accounts. An organised business with the knowledge of the right credit scores, the importance of it will surely be in a better position to take loans from banks and financial institutions.
Over the next five years, the government intends to roll out a 6,000-crore-worth program for MSMEs. As part of this rollout, the Emergency Credit Line Guarantee Scheme, or ECLGS, will be extended up to March 2023. Budget allocation for MSMEs in FY22 more than doubled to Rs. 15,700 crores (US$ 2.14 billion) vis-à-vis Rs. 7,572 crores (US$ 1.03 billion) in FY21. Along with such government initiatives, private lending institutions have also begun to show a deep interest in providing capital to MSMEs.
The boom of new businesses
India is a thriving and rapidly growing ecosystem of startups and entrepreneurs who are solving problems and making successful businesses. The year and the decade will witness the emergence of many such startups and entrepreneurial ventures. The MSME industry will similarly experience a complete overhaul with the birth of businesses in times to come.
Implementation of Trade Credit Insurance
The Insurance Regulatory & Development Authority of India (IRDAI) drafted guidelines for general insurance companies to come up with trade credit insurance products with customised covers for Small and Medium Enterprises (SMEs) and Micro, Small, and Medium Enterprises (MSMEs). The latest guidelines are to enable general insurers to offer trade credit insurance covers to licensed banks and other financial institutions. The adoption of trade credit insurance will largely be adopted in 2022 by the micro, small and medium businesses.