Digitisation is the only choice for small businesses in India — and it may add up to $200 billion to the GDP

• According to the Cisco India SMB Digital Maturity Study 2020, digitalisation of small and medium businesses(SMBs) could add anywhere between $158-216 billion to India's GDP by 2024.
• MSMEs currently contribute around 6.11% of India’s manufacturing GDP, and 24.63% of the GDP from service activities as well as 33.4% of manufacturing output.
• Everyone from the government, to corporates and even startups are focussing on the micro, small and medium enterprises of India.

India’s small and medium businesses are in the spotlight now as the Modi government has pushed out several initiatives to boost the sector, cue Atmanirbhar Bharat. Given the current scenario due to COVID-19, more and more consumers are looking online, e-commerce is booming and it provides the potential for SMBs to transform and build on digitisation of their businesses. A shift that has been underway and began post demonetisation in 2016.

According to the Cisco India SMB Digital Maturity Study 2020, digitalisation of small and medium businesses(SMBs) could add anywhere between $158-216 billion to India's GDP by 2024 and contribute to the country's economic recovery post COVID-19.

According to the Confederation of Indian Industries, MSMEs currently contribute around 6.11% of India’s manufacturing GDP and 24.63% of the GDP from service activities as well as 33.4% of manufacturing output.

From government, to corporates and startups – everyone wants to work for MSMEs

This goes on to prove why everyone from government, to corporates and even startups are focussing on the micro, small and medium enterprises of India. The Indian government on May 13 had said that the definition of micro, small and medium enterprises (MSME) will be changed to allow for relatively bigger companies to avail the benefits of cheaper and priority loans.

Earlier in April, Nitin Gadkari, India’s minister of micro, small and medium enterprises had launched an idea and innovations portal for SMBs – MSME Bank of Ideas, Innovation and Research.

But it's not just that, from e-commerce companies like Amazon and Flipkart to corporates like Mastercard have been doling out initiatives to help the MSME sector. Several startups like Khatabook, FarEye, Udaan, Shiprocket and Reliance-backed Nowfloats among several others are helping MSMEs in the digitization journey.

The challenges ahead

But for the thousands of MSMEs to turn to digitization in India will not be an easy task. India currently ranks 9th in the small and medium businesses digital maturity in the Asia Pacific region, according to the CISCO report.

The challenges range from an absence of digital skills and access to talent, to lack of necessary technologies required for a business overhaul.

"While technology will serve as the greatest enabler in helping SMBs leverage the opportunities created by the emerging low-touch economy, this crisis is far too complex for anyone to solve alone. Now more than ever, we need to work together to navigate these uncharted waters,” said Panish PK, Managing Director, SMB, Cisco India and SAARC.

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