The Ministry of Micro, Small and Medium Enterprises (MSME) on Friday announced that it has earmarked INR 9000 Cr to set up 150 technology centres across India. These centres will provide high-end machines, testing and redesigning facility to enhance MSME competitiveness.
Sudhir Garg, IRSEE, joint secretary, MSME said that gradually, the ministry has plans to proliferate these centers at the district level. “India is becoming the hub of intellectual production. We must improve our competitiveness to absorb global competence in order to emerge as champions of manufacturing,” he added. He was speaking at the CII Conference on Quality Manufacturing: Aspiring for Global Competence.
Union finance minister Nirmala Sitharaman had introduced Union Budget 2019 on July 5, 2019, and announced multiple benefits to ease credit access for micro, small and medium enterprises. This sector currently contributes to over 28% of the GDP, 45% to manufacturing output, more than 40% of exports.
According to DataLabs by Inc42, the total GVA (gross value added) of the Indian MSME sector by FY’20 is estimated to be $866 Bn, growing at a CAGR of 11.12%.
The credit access to MSMEs/SMEs, which also account for about 45% of India’s total exports, has worsened due to a liquidity crisis in the country’s shadow banking industry that has seen big lenders struggling to remain solvent.
DataLabs by Inc42 had reported that access to credit is an important aspect for any business and so is the case with MSMEs. Lending in this sector has mostly been dominated by informal financial entities such as money lenders. This can be attributed to the fact that nearly 40% of credit allotment to MSMEs in India is through informal channels. The market potential of digital lending is estimated to be between $80 to $100 Bn by 2023.
With the government also pushing fintech and other technological innovations for the MSMEs, the sector is embracing the power of technology to scale and become more efficient in India. Owing to this, the opportunities for startups and tech giants are set to grow multifold. Technology centres are expected to further enhance the capabilities of technology for MSMEs.