BENGALURU: The nearly 75 million small and medium businesses in India need to adopt or invest in technology aggressively to mitigate the effects of coronavirus pandemic and leverage the liquidity benefits announced by the finance minister, a research note shared by advisory firm Zinnov said.
While Micro, Small and Medium Enterprises (MSME) may utilise this additional liquidity to settle their payables, disburse salaries and other fixed costs, buy new inventory and procure raw materials, they should also consider investing in technology to make them disaster-proof, the Zinnov research said.
Union Finance Minister Nirmala Sitharaman’s emphasis on provision of an e-market linkage and boosting digital payments among the MSMEs also holds key to building a much-required digital ecosystem, which will help these companies get on the path of recovery.
For MSMEs, the e-market linkage will act as a replacement for trade fairs and exhibitions, and provide them access to remote markets. On the other hand, the report said, fintech will be used to enhance transaction-based lending, based on the data generated by the e-marketplaces.
The MSMEs employ over 130 million people and contribute around 30 per cent to the overall GDP of India. However, MSMEs in the three constituent sectors including manufacturing, retail and services have borne the brunt of the ongoing pandemic.
Supply chain disruption is one of the biggest challenges that MSMEs are currently facing. Essential retail is witnessing a surge in demand for essentials including groceries, personal care items and pharmaceuticals. Additionally, local grocery stores have gained prominence during the lockdown. In the services vertical, education and healthcare have been the least hit, while travel and hospitality have been majorly hit during the lockdown, Zinnov said in a blogpost.