Since 2017, the United Nations has designated 27th June as Micro, Small, and Medium Enterprises (MSME) Day.
The topic of this year’s global commemoration is “MSMEs: First Responders to Societal Needs.”
The COVID-19 pandemic has impacted MSMEs hard across the board, and the lockdown measures have pushed many on the verge of extinction.
MSMEs are an important element of the country’s economic and social fabric, and recovery will be impossible without a thriving MSME sector.
Indeed, many MSME owners have already gone above and above their legal obligations in the last four months to support their employees and communities in times of despair and adversity.
Governments, buyers, customers, and other stakeholders are being urged by the United Nations Industrial Development Organization (UNIDO) to rally behind MSMEs to assist them to grow.
In India, 6.3 million micro, small, and medium-sized enterprises (MSMEs) support over 12 million jobs, account for 45 per cent of exports and account for more than 30 per cent of industrial value-added.
History of World MSME Day
MSMEs are critical components of larger national and global value chains, and their health has an impact on supply chains as a whole, as well as their ability to deliver a diverse variety of goods and services.
- The COVID-19 problem has had a significant impact on MSMEs, with several polls indicating that nearly 1/3 of MSMEs intend to close within 3 months, resulting in the loss of job and livelihood for millions of people.
- The future looks bleak, but only time will tell how bleak. The pandemic and crisis are still with us, whether locked down or unlocked and how we handle them now and in the next months will have a long-term impact.
- UNIDO is focusing on the manufacturing sector, which includes around 2 crore MSMEs. Interactions with clusters all around the country exposed the recovery’s intricacies. Policy, regulations, trade, and markets are all experiencing unprecedented levels of uncertainty.
Demand for goods and services had dropped dramatically overnight, and the workforce had shifted as a result of large-scale return migration of lower-skilled workers.
Inventory depreciated and equipment deteriorated while supply networks were disrupted as a result of the lockdown, which lasted months.
It has all the components for a perfect storm, intending to deplete the financial reserves of multiple MSMEs overnight. To reopen their businesses, most MSMEs require cash resources to refill their working capital.
Any financial injection, however, will be temporary, and markets and consumer demand must be reestablished rapidly to restart the economy.
World MSME Day Celebrations in India
COVID-19 exposed and aggravated previously undetected flaws. MSMEs deserved to be recognised as important contributors to the economy, trade, and the creation of income and jobs.
MSMEs, on the other hand, underperformed in terms of productivity and quality, energy and the environment, health and safety and working conditions.
- Government policy and regulations, deficiencies in the MSME support ecosystem in terms of market requirements, technology, product design and innovation, shortfalls in entrepreneurial and manufacturing competencies and systems, and historic conditions, such as legacy waste and pollution, are all contributing factors.
- MSMEs, as a first step, deserve to be treated with decency and respect and to have their legitimate desire to expand their business encouraged.
- More small firms growing into medium and large firms will help India. The recent cabinet decision to reform and broaden the definition of MSMEs is a positive step forward.
- The CHAMPIONS Initiative: Creation and Harmonious Application of Modern Processes to Increase Output and National Strength is a good example of this.
- Contrary to popular belief, a moment of crisis, such as the one we are currently experiencing, is an ideal time for a change to ensure that we can rebuild for a better future. The information resource is organised in five stages to help MSME businesses restart, recover, and renew.
This is supplemented by practical advice for improving important business areas like operations, people, health and safety, entrepreneurship, financing, and supply chains. How-to guides and checklists are included with the practical tutorials.
Facts you must know about MSME
It is common knowledge that micro, small, and medium enterprises (MSME) are the backbone of the Indian economy and the country’s second-largest employer.
According to reports, India’s MSME sector provides roughly 70 million jobs, has a network of around 30 million units, and produces more than 6000 distinct products.
- It has been struck hard by the pandemic because economic activity has come to a halt. According to a recent survey, the MSME sector employs over 114 million people and accounts for more than 30% of the country’s GDP.
- According to reports, under the Central Government’s credit-linked liability subsidy scheme, 65,312 micro-entrepreneurs generated roughly 5.2 lakh jobs last year in 2019.
- The government recognised the sector’s importance and has been pushing for reforms to reach a GDP growth rate of twice that of the previous year, long before the lockdown.
- In India, the labour strength of the MSME sector is significantly greater than that of huge corporations. Micro, small, and medium-sized businesses (MSME) play a critical role in creating jobs at a cheaper cost of capital than major sectors.
- The lockdown had created a survival situation for smaller enterprises, the majority of which had been suffering from a severe lack of working capital to run their businesses.
- MSME businesses are bringing in ground-breaking inventions that help the country grow economically.
- To help the MSME sector thrive, the government announced a series of initiatives in May 2020, including an INR 50,000 crore equity injection, an INR 20,000 crore subordinated debt for stressed MSMEs, and an upward modification of the turnover cap.
Everywhere we look, we can see how our daily lives have changed.
Drones tracking disease and dispatching delivery, online learning, and work from home are just a few instances of how digital or digital-enabled technologies are assisting the COVID-19 health and humanitarian response.
More transition towards a new normal is widely expected, with a future marked by increasing circularity, increased digitization, and increased resilience.
As we emerge from the crisis, let us keep our compass pointed toward a future that is sustainable, inclusive, and resilient, as all nations agreed in 2015 with the Sustainable Development Goals.
MSMEs are key enablers in this process and deserve genuine help to re-establish a thriving business.