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ET MSME Day 2023: How can MSMEs in manufacturing gear up to be future-ready

MSMEs’ contribution will be integral in making India achieve its lofty goals of becoming a developed nation by 2047. With a contribution of 30% to the country’s GDP, the MSME sector has immense potential to help the economy grow by leaps and bounds.

The role of manufacturing MSMEs, in particular, will prove significant in India’s economic aspirations as a nation. The MSME sector in India employs over 100 million people and accounts for 45% of manufacturing output and over 40% of the country’s exports, according to a PIB release. With 63.4 million units spread across the country, the sector contributes around 6.11% of the manufacturing GDP and 24.63% of the GDP from service activities.

But how can such MSMEs gear up to be future-ready? Shridhar Kamath, Partner, Consulting, Deloitte India, outlines some challenges that this sector must address to go the next mile. “Manpower productivity has been a major challenge. If we benchmark our manufacturing goods with the leading players in the same sector, it can be seen that we are always lower in terms of productivity. Besides this, there is the China Plus One opportunity but that also can be leveraged onlyif we tackle the aspects related to ease of doing business,” he says.

Explaining his view, Kamath adds that it takes longer to start businesses, specifically in manufacturing, as there are a number of approvals required around land, environment and pollution, to name a few. “So it becomes that much more important to focus on how organisations can be helped in setting up manufacturing faster, but that's one part of the story. The other story is the capability of Indian manufacturing to meet global standards. We still have a long way to go when it comes to advanced manufacturing capabilities,” he states.

Technology capability, he says, is something that has to be built within the country instead of being brought in from outside. So, focusing on technology development to support these industries is going to be an important area to strengthen. Besides that, a workforce with the right skills and capabilities would also be essential in getting tech advancements to the manufacturing sector.
ayanth Mutha, Director of Bengaluru-based agri-electricals firm Himlite Products, says the government should play an intrinsic role in tech adoption for MSMEs. “In order to get more exposure to the world market, MSMEs should be taken through the process more comprehensively. Taking part in global fairs can help in opening up more avenues for the industry. The government should encourage and promote more such participation in international exhibitions among MSMEs,” he says.
Getting good human capital, he adds, is another crucial aspect. “We need government support in bringing more exposure and funds to the fore. MSMEs won’t be able to pay better unless they scale up and until then, they won’t get the right talent either. It is all interconnected,” he states.

Given the strength of such a sector, support in skilling and upskilling initiatives will be the need of the hour for MSMEs to advance in manufacturing in the future. Besides that, being open to innovation will also become critical to staying competitive and surviving as an enterprise.

India’s goals cannot be a reality unless even the smallest MSME becomes a part of the entire chain. The large players too depend on their smaller suppliers to get the entire network up and running. “There could be a lot of challenges in achieving the final goal. But the basic premise is that all parts of the chain need to work effectively and efficiently for growth to eventually happen,” Kamath adds.