Ease of doing business for MSMEs: With respect to India’s trade deals with countries such as Malaysia, the UAE, Australia, 41 per cent respondents in the pre-budget survey said such deals would hamper MSMEs’ growth.
Ease of doing business for MSMEs: Consulting firm Deloitte’s annual pre-budget survey of senior leaders across industries has suggested focusing on bringing more MSMEs into the technology fold and providing them with enhanced credit facilities in the upcoming union budget 2023-24. 55 per cent of the 181 respondents collated in an online survey believed that “supporting MSMEs for technological integration in their operations and providing a platform for effective credit facilities would aid this endeavour.” “This signals that there is a growing realization of the importance of bringing MSME onto digital platforms, which will help in building a strong and inclusive digital ecosystem,” the survey report said.
“While the government has already taken measures on both aspects of technology and finance for MSMEs but latter have been unable to take full advantage of them, largely because of their basic problem of formalization. Hence it would be important to create some different mechanisms by which more MSMEs could get access to both technology and finance,” Sanjay Kumar, Partner, Deloitte India told FE Aspire.
Moreover, Deloitte said integrating MSMEs into the global supply chain will be the way forward for the MSME sector in India as accelerated credit facility, incentivization, and technology integration will improve operational efficiencies and reduce costs. “This will enhance their global competitiveness and strengthen the sector, thereby, boosting the economy and providing maximum employment opportunities to low-income strata of the population,” the pre-budget report noted.
The suggestion assumed significance as India has been aggressively pursuing free trade agreements with multiple countries. In 2021 it signed a trade pact with Mauritius and in 2022 with the UAE and Australia after a gap of 10 years. Similar agreements with the UK, Canada, the European Union, and more are in the offing.
Also read: MSMEs see technology as cost centre due to lack of awareness: Experts
While respondents in the survey said they are very optimistic about the role these treaties will play in creating a market, attracting foreign investments, helping domestic firms get access to emerging technologies, and boosting exports, a number of them weren’t very sure of its positive impact on MSMEs. In fact, they were divided about whether trade treaties could possibly impact growth amongst MSMEs adversely.
While 36 per cent said they were not sure whether trade deals would hamper MSMEs and 23 per cent believed they won’t adversely impact small businesses, 41 per cent on the other hand said such deals would hit MSMEs’ growth.
“This brings us to the question that how MSMEs’ capacity can be improved to take advantage of the trade deals. Trade agreements only provide an instrument (to tap into foreign markets) but benefitting from them is the work that the government or industry associations can undertake,” said Kumar.
For MSMEs, Kumar said some handholding can be provided in upgrading their products based on the choice or preference of the countries where they wish to sell their products. “This would include product designing as per the specifications of the importers, improving the product quality so that the products are well accepted by the importers, etc. One way to achieve these could be creating mega export parks.”