Ensuring Sustainability for MSMEs

EDII has been working in the area of MSME growth and competitiveness for almost 40 years now. The issue of sustainability and growth have always been the pain points for MSMEs. MSMEs are often hard pressed for resources and hence reel away, several times, in the absence of protectionism, thus unable to survive competition. Adopting technologies, introducing measures that help them meet global standards is often difficult for MSMEs. Some strategic approaches, however, have proved relevant in terms of imparting competitive edge to MSMEs. 

EDII’s experience of cluster development has been rewarding in terms of placing MSMEs in several clusters on a higher pedestal in terms of access to market linkages, technology, infrastructure and related areas. When enterprises are co-located and linked through networks, cooperatives, consortia, or clusters, they benefit from considerable economies of scale and scope. Such an approach improves their access to markets and resources, as well as their capacity to integrate into local and global value chains and develop innovations.

For MSMEs, globalisation and trade liberalisation have brought new possibilities as well as new obstacles. Only a tiny portion of the MSME sector has been capable of identifying and exploiting these possibilities, and successfully dealing with the constraints. Cluster and Consortia approaches have helped combine small strengths of individual entrepreneurs to form a force.

Also, there is a well instituted Business Development Services Market ready to refurbish the MSME Sector. EDII has been actively working in this space, and has been sensitizing MSMEs to come forth to avail these services. Generic BDS Providers like accounting and financial consultants, tax consultants, labour law consultants, etc. are widely available. The Embedded BDS are by and large implanted in the buyer-seller relationship and feedback mechanisms.  It is a two way process where the buyer and seller interact with each other and state their product preferences. Strategic BDS becomes critical in times of acute competition. Unfortunately though, the demand for strategic BDS is rather torpid, mainly because of a widespread lack of awareness. EDII has been directing efforts to bridge these gaps between entrepreneurs and professional consultancies. Hearteningly, EDII has been appointed as Project Management Consultant (PMC) for implementation of SIDBI Cluster Development Fund (SCDF) Scheme across all the states and UTs. The mandate of the project is to develop Industrial and Social Infrastructure for development of MSMEs in various clusters and industrial parks

The role of small business associations as potential or current BDS providers and important facilitators or brokers of BDS or a link between BDS buyers and suppliers is also critical.

Information asymmetries need to be bridged and MSME entrepreneurs need to be made more aware. The Government of India needs to be credited with bringing about several policies and reforms to address the issue. These pro-MSME policies convey the desire to reconcile economic growth with sustainability and social inclusion while also encouraging MSMEs to continually update their quality standards. On these lines, the recent Mega International Summit on MSMEs’ Competitiveness & Growth, organized by the Ministry of MSME, GoI & EDII was very well received.

It’s interesting to note how MSMEs are progressing from strength to strength, and moving towards becoming a strong pillar of the nation.

Best wishes !!!

­- Sunil Shukla