Table of Contents
The MSME sector is a vital contributor to India’s socio-economic landscape. MSME’s contribution to India’s GDP through exports, employment generation, innovation and rural development is immense. Not surprisingly, the Interim Budget, announced by the Finance Minister, Nirmala Sitharaman on 1 February 2024 recognised their significance. Through several incentives and initiatives, the intent of the government to provide MSME market access, finances, training and technology adoption was mentioned. Though there’s clarity required on the actual action-plan and steps to be taken, it’s safe to assume that MSMEs and their development will be a priority for the years to come.
In the following sections, we take a look at how to enhance MSME market access and market expansion, how export initiatives will boost exports for MSMEs, and how through e-Commerce platforms and adoption of new technologies MSMEs can grow their business.
Also read: Interim Budget 2024 – Key highlights across sectors
Initiatives for MSME market access in Interim Budget
The Interim Budget discussed several key themes or areas where support for development, in the form of finances, incentives, digital solutions, training etc. will be provided. Though details on several components are likely to be available in the final Budget (expected to be out around July 2024), there are several aspects that imply relevant encouragement to be provided for MSME empowerment.
It also shows the government’s vision towards building a resilient and self-reliant economy, steering towards growth.
- ₹1 lakh crores on technology innovation, research and development in the private sector
- ₹11.11 lakh crores capital expenditure on infrastructure development
- Lakhpati Didi scheme for women empowerment in rural India to foster economic independence and self-reliance (for 3 crores women)
- Railway corridors, airport infrastructure enhancement, metro rails and e-buses for transportation
- Domestic manufacturing of IT hardware and semiconductors
- Tax reforms (i.e., indirect taxes) and GST compliance
- Schemes for solar rooftops, funds for offshore wind energy, and coal gasification
- Schemes for food processing, and agro-based MSME training, and investment in post-harvest activities for scaling farmer’s income
- Customs improvements and exports support (especially for fishery)
- Domestic tourism, port connectivity, including opportunities to build amenities in Indian islands such as Lakshadweep
All of these initiatives speak of business growth and market expansion opportunities for MSMEs. It also throws light on the future prospects and how micro and small companies can be empowered and be growth-driven for building an inclusive Indian economy by 2047.
Also read: Interim Budget 2024 – Capex expenditure plans for infrastructure development
Market expansion for MSMEs – Roadblocks and how to solve for it?
In India’s diverse economic landscape, MSMEs are often considered as the backbone of the economy, especially when looking at the contributions of MSMEs in the rural sector. However, they are not averse to global competition and that’s what makes it crucial for them to have market access.
The government in its Interim Budget recognised the importance of the sector and is taking the required steps to assist them financially, technologically, and through training to scale and be competitive. Moreover, in the light of recent tax reforms and capex plans set down in the Interim Budget, it’s evident that enabling MSME market access for expansion, exports and new business opportunities is paramount. Let’s take a closer look at it.
1. Scaling market reach through digital technology adoption
There can be little debate on the need for MSME digital transformation. This can be through integration with e-Commerce platforms to transcend geographical boundaries and cater to a wider online audience, or by using digital tools for marketing and promotions strategies to create brand awareness and sales.
Technology offers MSMEs a stable, strong and reliable platform to expand their market access.
However, the challenge lies in being technologically savvy and able to leverage technology tools. In most cases, Indian MSMEs and start-ups that adopt digital tools are led by the youth, who are technologically familiar and understands how to leverage software and tools.
In the Interim Budget, technology education and skill set training to the youth is as such highlighted to encourage more innovation and entrepreneurship in the MSME sector. For example:
- In the solar rooftop initiative, the aim is to provide 300 units of free electricity to 1 crore households. Individuals or MSMEs with technical skills can find employment or growth opportunities through installation, maintenance and manufacturing work.
- The corpus of ₹1 lakh crores with 50-year interest free loans, is an impetus for the youth and new/established business (including MSMEs) in sunrise sectors to adopt technology solutions and scale.
Also read: Interim Budget 2024 – Initiatives for technology, R&D, and innovation
Other initiatives in the past
It must be noted that technology adoption is not a new concept. The government has always encouraged digitisation and over the years has introduced several schemes and portals for MSMEs to grow their business, expand market access and get new customers.
For instance, the GeM (Government e-Marketplace) was launched in 2016 to streamline government procurement and to enable small businesses reach out to potential buyers. The portal allows sellers to register and list their products and services, and sell on GeM (online) or get direct purchase orders on GeM.
2. Expanding geographies with tech-enabled export initiatives
When it comes to market expansion and access to new markets, export is a lucrative way to begin. MSMEs are strong contributors to India’s exports, especially for garments, engineering goods, processed food, etc.
In most cases, MSMEs that are tech-enabled, especially those selling through e-Commerce platforms, have greater outreach to new markets. This is mainly because, e-Commerce platforms simplify the purchasing process, increases turnover, ensures compliance (e.g., documents on AWB, bill of lading, consigner and consignee, FCR etc.), and helps to tracks order progress.
Moreover, automation and data availability also help with analytics and insights, and informed decision making. It also supports retargeting and online promotion and engagement activities to retain customers. Most e-Commerce platforms have partnership with logistics providers for exports to keep transportation a hassle-free experience for the MSME.
In this respect, some of the export initiatives highlighted in the Interim Budget include:
- Double exports to ₹1 lakh crores through the Pradhan Mantri Matsya Sampada Yojana
- Steps in Customs to facilitate international trade (Currently – the import release time has reduced by 47% at Inland Container Depots, and by 28% at air cargo complexes and by 27% at sea ports)
Also read: Interim Budget 2024 – Digital solutions for logistics management
3. Exploring new opportunities through skill enhancement and certifications
Training the youth and MSMEs on technical subjects has been highlighted in the Interim Budget as a key area of investment.
Of the many challenges that prevents MSMEs from acquiring new customers and market access is the lack of credibility on product/service quality. For instance, an ISO certification will build credibility and establish the MSME as one that meets international standards.
This is also true for government tendering as many tender opportunities require ISO registration as a requirement. (Also read: Benefits of ISO certificate in e-tendering)
Some of the mentions in the Interim Budget include:
- The success of the Skill India Mission having trained 1.4 crore youth, upskilled another 54 lakhs, and established 3,000 new it is.
The government is prioritising infrastructure development and this requires improvement in quality standards as well.
For instance, economic corridors, aviation sector improvement, etc. highlighted in the Interim Budget. Infrastructure development will directly impact logistics and enable MSMEs to access new markets, reduce turnaround time and lower costs.
In addition to this, the government has already launched several schemes and initiatives to help deserving MSMEs upskill and reskill their workforce. Certifications will boost MSME market access, making it a strategic investment for them.
Also read: Courses in CTTC, Bhubaneshwar and MSME Technology Centre, Indore
4. Financial aid and government support for growth
It goes without saying that access to finance will remain the greatest roadblock for MSME market access. Whether it’s for meeting working capital needs, buying raw material or equipment, hiring talent, or market expansion – lack of finance is an obstacle almost all MSMEs are familiar with.
The government has introduced several loan initiatives under the Pradhan Mantri business loan schemes that MSMEs can avail to meet their business requirements. These loans are usually collateral free, have low interest rates, and designed to facilitate MSMEs with endeavours towards market access and growth.
Additionally, the tax reforms introduced in the Interim Budget, especially with regards to GST and corporate tax reduction, will help MSMEs to lower their financial struggles and use up the reserves in required marketing activities.
Also read: Interim Budget 2024 – Tax reforms, GST compliance, and what’s in it for MSMEs
Next steps in enhancing market access for MSMEs
The steps being taken by the government for MSME market access is visible and indicates the direction the government is taking. While over the years, many MSMEs have leveraged the opportunities present and grown their businesses with it, it’s still evolving.
Some of the key achievements mentioned in the Interim Budget speech include:
- PM-Vishwakarma Yojana for end-to-end support to artisans and craftspeople engaged in 18 trades.
- Integration of Electronic National Agriculture Market with 1361 mandis to provide services to 1.8 crore farmers with trading volume of ₹3 lakh crore.
- PM Mudra Yojana having sanctioned 43 crore loans aggregating to ₹22.5 lakh crore for entrepreneurial aspirations of the youth.
Moreover, with the government’s focus on capex and infrastructure development, greater momentum across sectors can be expected, including Indian steel exports.
Also read: Interim Budget 2024 – Opportunities for Indian steel sector and MSMEs
As an MSME keen to grow your manufacturing business, there are opportunities available for you to leverage.
Sohini is a seasoned content writer with 12 years’ experience in developing marketing and business content across multiple formats. At Tata nexarc, she leverages her skills in crafting curated content on the Indian MSME sector, steel procurement, and logistics. In her personal time, she enjoys reading fiction and being up-to-date on trends in digital marketing and the Indian business ecosystem.
