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International Journal of Trend in Scientific Research and Development (IJTSRD)

International Open Access Journal |

ISSN No: 2456 - 6470 | Conference Issue – ICDEBI-2018

Organised By: V. P. Institute of Management Studies & Research, Sangli

Digitalization of MSME’s : A Need of an Hour

Dr. Sudhir V. Mane
Assistant Professor, Head of Department of Commerce,
mmerce, Shivneri Mahavidyalaya,
Shirur Anatpal, Latur, Maharashtra, India

MSMEs in India are a significant donor to the Indian developed, whereas 17 per cent of the enterprise was
country and are drivers of progress. By its less assets engaged in the services behaviour.
behaviour The residual 16 per
oriented and high labour absorption character, MSME cent of the enterprise were busy in repairing and
sector has made significant assistance to the conservation. About 90 per cent of the firms were
developed production, services formation, rural proprietary owned firms. The manufacturing sector
secto is
industrialization and export of the country. It is an significant segment and considered to be a key
predictable that in terms of value, the sector accounts development driver of the Indian country like in
for about 45 per cent of the manufacturing several developing countries. By NMCC and
manufacture and 40 per cent of the total export of the NASSCOM (2010), the Indian manufacturing
country. Over 6000 products ranging from traditional separation has over 53 lakh manufacturing units with
to high-tech
tech items are manufactured by MSMEs in 99 per cent of the
he units employ less than 10 workers.
India. The sector creates largest services opportunity Food & beverages, textiles, non-metallic
non mineral
next only to agriculture. The present paper is based on products, chemical products and machinery &utensils
secondary data which covers MSMEs, SMEs, their role, are the top 5 verticals in terms of number of units and
digitalization in MSMEs, their benefits etc. they account for nearly 75 per cent of the total number
of units
its in the manufacturing sector. MSMEs in India
INTRODUCTION Small scale sector is the spine of Indian
MSMEs in India MSME Sector plays a major role in manufacturing sector with 90 per cent of the total
India's there export performance. According to the industrial units. However, according to the statement
Ministry of MSME (2011b), just about 45 45-50 per cent by NMCC and NASSCOM (2010), the contribution of
of the Indian export is have a say by this sector. This Indian manufacturing
cturing to the national GDP has
takes place through merchant exporters, trading stagnated over the last few years by about 15 per cent
houses and export rt houses. They may also be in the in spite of the progress in the built-up
built sector. The
form of export instructions from big units or the donation level is found to be much lower when
manufacture of part use in over exportable goods. It benchmarked with comparable economies such as
would shock lot of to know that non-traditional
traditional crop China (39.3 per cent), Thailand
hailand (35.2 per cent),
account for more than 95 per cent of the MSME Malaysia (31.1 per cent), Indonesia (24.7 per cent)
export. In the last decade, the export arrangement has and Vietnam (20.8 per cent) (NMCC & NASSCOM,
been additional fuelled by the progress of clothes, 2010). The small sale sector is a significant
leather and gems & jewellery units of this sector. The component of the foundation layer of manufacturing
product groups where the sector dominates in exports sector and entrepreneurial actions in India. As the
are sports education items, ready-to-wear
wear garments, productivity and performance of large manufacturing
woollen garments &woollens,, plastic products, firms would be influenced by the competitiveness of
processed food and leather products. According to the their suppliers, i.e., mainly MSMEs, it is significant to
fourth survey of MSME, 67 per cent of the enterprises improve productivity levels of MSME to improve the
in the register MSMEs sector were occupied in manufacturing sector as an entire.

@ IJTSRD | Available Online @ | Conference Issue: ICDEBI-2018 | Oct 2018 Page: 245
International Journal of Trend in Scientific Research and Development (IJTSRD) ISSN: 2456-6470
2456 | IF: 4.101
Challenges faced by MSME sector in India: Digitalization of Industries:
Despite the huge potential, the small scale sector face Manufacturing Industry in India has its history of
several confront and there have been the inadequacy going through various phases of development over the
in capital, technology and marketing. While SME period of time. It shows the dream of becoming one of
sector in India did well in conditions of the absol
absolute high growth sectors in the coming years. Scientific
information, its relative performance was on the verge and Technological developments have changed the
of stagnation. Still the services level remains stagnant scenario. Process industries and machine builders and
on a per unit basis, but has improved considerably in Manufacturers are adopting with Innovative solutions
relation to the organized sector services. The number in the fields of software
ftware and automation. It is proved
of unregistered units is much higher
gher than the number that SMEs are the backbone of Indian Industrial
of registered units. found that cost, excellence and development. SSIs have performed remarkably in the
release time are the major pressures on the small industrial development of the country. SSIs has great
industries. According to the study, SSIs speak out that share in industrial production, in export and in
the major constraints are lack of progress conducive generating employment ent opportunities. Even having
environs, inadequate administration support and occupying majority share of the industry, they are
incentive and poor infrastructure for training. SSIs suffering from various issues which are becoming
have highest competitiveness at local level and lowest hindrances in their growth. The major issue of SMEs
competitiveness at worldwide MSMEs in India level. is quality improvement. As there is extensive manual
Use of information to optimize decisions, to define intervention in manufacturing
facturing processes and lack of
quality standards, and nd optimization of working skilled labor, they can’t compete with big industries.
surroundings are the chief areas of competency
expansion (Singh et al., 2010). According to the As we are well acquainted that customer demands are
fourth all India census 2006-2007, 2007, conducted by dynamic and ever changing in nature, the pressure of
Ministry of Micro, Small and middle enterprise
enterprise, Govt. competition is also increasing, SMEs have to face
of India, it was uncovered that about 29.40 per cent of these major problems. Digitalization in SMEs will
the total units were suffering from illness and about definitely enhance efficiency. Digitalization will
3.73 per cent of enterprises undergo from incipient reduce cost of production and it may minimize the
sickness. Food products and beverages (17.73 per manufacturing defects. Digitalization will help to
cent), apparel (10.23 per cent), textiles (9.11 per cent) meet the international quality standards and it will
were the top three industries that suffered from help them to strengthen their position in the global
sickness. Percentage share of stopped up enterprises at market.
nationwide level was about 22 per cent of the total
registered enterprises. According Confederation of Digitalization for increasing Revenue:
Indian manufacturing (CII), Indian MSMEs face The growth of SMEs can be driven by E- E commerce.
several challenges for progress. Some of the evils are Fast growing E-commerce
commerce business will help to
high cost of credit, incomplete access to equity enhance the revenue. Reduction in cost and
capital, problems in supply to government operational efficiency will help to reduce the cost and
departments and agency, procurement of raw in turn it will increase the revenues to MSMEs.
ources at a competitive cost, inadequate
infrastructure facilities such as power, road, low skill Digitalization
ion for acquiring larger customer base:
levels and lack of access to modern technology, lack Ecommerce in large cities has flourished. As the
of accomplished manpower, evils of storage space, number of internet users is increasing, SMEs can
designing, packaging and manufactured goods develop their customer base in wide range.
display, absence
sence of suitable device to revive/close sick Digitalization will definitely help SMEs to enhance
enterprises rapidly and lack of resources for branding their customer base.
and marketing, lack of right to use to global markets
(CII, 2010). Infusing competitiveness, infrastructure Digitalization for increasing operational efficiency:
development and bringing vast population of MSM MSMEs Digitalization will reduce the cost of operation.
in the unregistered sector to the usual is the main Ecommerce will reduce the marketing cost such as
confront previous to the GOI at there. outsourcing to call centres,
centres advertisement etc.
Through the digitalization. SMEs can reduce all the
operational expenditures.

@ IJTSRD | Available Online @ | Conference Issue: ICDEBI-2018 | Oct 2018 Page: 246
International Journal of Trend in Scientific Research and Development (IJTSRD) ISSN: 2456-6470
2456 | IF: 4.101
Digitalization and Information: operating different programmes by a dedicated team
SMEs lack in information regarding new of professional
ssional at all levels and operate through 142
developments and new technologies
technologies. Due to offices located all over India and one office located at
digitalization, SMEs can access all type of Johannesburg, South Africa.
information on different Medias. Due to digitalization,
SMEs will get all the benefits offered by technology. Small Industries Development Bank of India
Governance and Institutional support for MSMEs is an top bank set up to provide direct/indirect
The Ministry of Micro, Small and Medium financial assistance under different scheme to meet
Enterprises is the directorial Ministry in the credit needs of the small-scale
small sector and to
administration of India for all matter relating to coordinate the purpose of other institutions in similar
Micro, Small and Medium Enterprises. It designs and activities. Their major operations are in the areas of
equipment policies and agenda from side to side its refinance assistance, direct lending, and growth&
field organizations
tions and attached offices for promotion support services.
and progress of MSME sector. The office of the
growth representative is an emotionally involved Khadi & Village Industries Commission (KVIC),
office of the Ministry of MSME, and is the apex body established under the Khadi and Village Industries
to advise, coordinate and formulate policies and Commission Act, 1956, is a statutory friendship
program for the growthrowth and endorsement of the engaged in promoting and developing Khadi Kha and
MSME sector. The office also maintains liaison with Village Industries for provided that services
Central Ministries and other Central/State opportunity in rural areas, thereby intensification the
Government agencies/ organizations/ financial rural country. The KVIC has been identified as one of
institution. the major organizations in the decentralized sector for
generating sustainable rural nonfarm services
Ministry of MSME and its complex of opportunity.
The Development commissioner office of MSME, Divisions of Ministry of MSME
have a network of Development institute, Testing The Ministry of MSME has two Divisions called
Centres, autonomous bodies which comprise Tool Small & Medium Enterprises (SME) Division and
Rooms and Tool Design Institutes, Technology Agro & Rural Industry (ARI) Division. The SME
Development Centres and preparation Institutes. divider is allocated the work of administration,
Other connected agencies es of this workplace are caution and administrative
ministrative supervision of the National
National MSMEs in India Small industry Corporation Small Industries Corporation (NSIC) Ltd. and the
(NSIC), Small Industries Development Bank of India three independent national level entrepreneurship
(SIDBI) and Khadi & Village Industries expenses development/training organisations. The separation is
(KVIC). also accountable for completion of the schemes
connecting to marketing
arketing and export promotion. The
National Small Industries Corporation (NSIC) Ltd. ARI separation looks after the management of two
was recognized in 19555 by the GoI with a view to statutory bodies viz. the Khadi & Village Industries
promote, aid and forward the progress of small Commission (KVIC) and the Coir Board. It also looks
industries in the country. NSIC continues to remain at after a newly created organization called Mahatma
the vanguard of industrial development throughout the Gandhi Institute for Rural Industrialization (MGIRI).
country with its various programmes and project to It supervises the completion of the Prime Minister’s
help the MSME in the country. The main functions of Services formation Program (PMEGP). The Coir
the company are to promote aid and foster the Board is a statutory body established under the Coir
progress of micro and small enterprise in the country, Industry Act, 1953 for promote overall development
generally on a profitable basis. It provides a variety of of the coir industry
try and civilizing the living situation
support armed forces to micro and little enterprises by of the workers engaged in this conventional industry.
catering too their supplies in the areas of raw material Coir manufacturing is one of the major agro base rural
procurement, manufactured goods marketing, credit industries in the country. The activities of the Board
rating, acquisition of technology, and adoption of for expansion of coir industries include enterprise
modern management practices. The NSIC is directly scientific, technological and economic research and

@ IJTSRD | Available Online @ | Conference Issue: ICDEBI-2018 | Oct 2018 Page: 247
International Journal of Trend in Scientific Research and Development (IJTSRD) ISSN: 2456-6470
2456 | IF: 4.101
development activities; developing new products & the state level, region Industrial Centres was setup
designs; and marketing of coir and coir goods in India throughout the state. Over a period of time, with
and abroad. It also promotes co co-operative liberalization, government policy has moved from
organizations amongst producers of husks, coir fibre, protective measures to infusing progress and
coirr yarn and manufacturer of coir products, ensuring competitiveness in the sector. Supportive events
remunerative returns to producers and manufacturers. focused on infrastructure increase, technology and
The Board has promoted two research institutes fineness.
namely; Central Coir Research Institute (CCRI),
Kalavoor, Alleppey and Central association of Coir Finance
skill (CICT), Bangalore for responsibility research The Government has initiated several measures to
actions on dissimilar aspect of coir manufacturing. facilitate easy access of funds to MSME sector. One
such initiative is priority sector
secto lending. For public
State Government support for MSMEs and private sector banks, 40 per cent of the Net Bank
The primary responsibility of promotion and maturity Credit (NBC) is earmarked for the priority sector.
of MSMEs is of the state Governments. However, the Credit to MSMEs is from side to side the priority
GoI, supplements the efforts of the State Governments sector lending policy of the bank. For the foreign
through a variety of initiatives. The role of the banks, 35 per cent is for mainin concern sector of which
Ministry of MSME and its organizations is to assassist 10 per cent is reserved for MSMEs. Any shortfall in
the states in their efforts to encourage lending by foreign banks has to be deposited in Small
entrepreneurship, services and livelihood opportunity Enterprise growth Fund (SEDF) setup by SIDBI. The
and perk up the competitiveness of MSMEs in the Government has also announce policy package for
changed economic situation. State Government stepping up credit to small ll and medium enterprises
executes similar promotional and developmental with the objective of repetition the credit stream to the
projects/schemes and provide a number of behind sector in the next five years. In recent years, the sector
incentives for growth and promotion of MSME sector has shown interest in alternative sources of funding
in their own states. These are executed from side to such as primary/secondary securities market, venture
side State Directorate of industry, who have District capital and private equity, outside commercial
Industries Centres (DICs) under them to realize borrowings, factoring services etc. Efforts are being
central/state level schemes ( put for Limited Liability Company Act to provide
Apart from profitable banks, at state height, State thrust to MSMEs in their move towards
Financial Corporation’s (SFC) and twin function State corporatization. The management has introduced a
Industrial growth Corporations are the major sources Credit Guarantee Scheme which wh provides collateral
of long air money to MSMEs. free credit ability by eligible lending organization to
new and available MSMEs for loan upto 100 lakh per
Government policies and support meas measures for borrowing unit.
Since sovereignty, GoI has given importance to the Technology
MSME sector, as it creates services opportunities and To facilitate skill up gradation and quality
facilitates mobilization of secretive sector resources. improvement, more than a few measures have been
GoI has taken supportive measures such as condition initiated
itiated by the GoI. The Government has set up ten
of items for exclusive manufacture
facture by MSMEs, access state of the art Tool Rooms and preparation enters.
to credit through priority sector lending program for These tool accommodations are MSMEs in India
commercial banks, excise exemption, reservation proficient in mould and die creation technology and
under Government acquire program and 15 per cent abreast with latest technology such as CAD/CAM,
price preferences in purchases, infrastructure CNC machiningning for tooling, void Heat Treatment,
development and establishment of institutes of Rapid Prototyping etc. Tool Rooms offer guidance
consumerist and skill development. MSME programmes on technical skills required for the
Development Institutes, formerly recognized as Small manufacturing sector. The direction has introduce ISO
industry Service organization (SISI), were set up all 9000/14001 Certification Fee Reimbursement Scheme
over India to train youths and tool accommodation and reimburse 75 per cent of the certification fees
were set up with German and Danish assist to give subject to maximum of 75,000. To facilitate
skill preparation and provide technical assistance. At replacement of old equipment with new ones,

@ IJTSRD | Available Online @ | Conference Issue: ICDEBI-2018 | Oct 2018 Page: 248
International Journal of Trend in Scientific Research and Development (IJTSRD) ISSN: 2456-6470
2456 | IF: 4.101
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Conflict? Academy of
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