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Empowering Rural MSME Landscape Through Technology
Lack of collateral and credit history impact MSMEs who are looking to access credit from traditional banks. In a situation like this, there are competent players in the NBFC and FinTech sectors that can help solve this problem from its roots
Rural India is home to 65 per cent of the total population of India. The digital revolution has successfully transformed the landscape for Micro, Small and Medium Enterprises (MSMEs) not just in cities but in rural areas too. More than 50 per cent of MSMEs are based in rural India and are making use of innovative tech solutions for meeting their demands. With improved access to new markets, increases productivity, and reduced costs, several new-age digital platforms are helping connect MSMEs with suppliers, customers, and partners, and leading to the creation of new business opportunities and improved supply chain management.
The contribution of MSMEs in India is around 6.1 per cent of its manufacturing GDP, 24.63 per cent of its GDP from service activities and 33.4 per cent of India's manufacturing output as per data sourced from IBEF. Assisting the manufacturers that come from rural India and empowering them through technology is the best possible way to increase India’s export GDP from its present USD3.5 billion to reach double digits and cater to 1 per cent of the worldwide demand. However, there is an earnest need for the MSME to adopt new-age technology solutions such as providing data insights, artificial intelligence, augmented reality (AR), machine learning and the Internet of Things (IoT) that can enable MSMEs in financial & operational services.
Technology can a crucial role in assisting the MSMEs in rural areas upscale and integrate their operational capabilities. Mobile-based payment systems can make it easier for MSMEs to conduct financial transactions, reducing the need for cash and increasing transparency. Artificial Intelligence (AI) can contribute massively to accelerating the growth of MSMEs through automation in industries related to textiles, machinery and parts, mining and quarrying, basic metal industries, electrical machinery and apparatus, transport equipment and parts etc. Cloud-based software can help MSMEs to automate processes, manage inventory, and track sales, improving operational efficiency.
Making informed decisions
Online marketplaces can provide MSMEs with a wider customer base, enabling them to reach new markets and increase sales. Ecommerce platforms can enable MSMEs to sell their products directly to consumers, eliminating intermediaries and increasing profits. Digital marketing tools can help MSMEs to reach and engage with customers, creating brand awareness and generating leads. Artificial intelligence and machine learning can help MSMEs to analyse data and gain insights, enabling them to make better business decisions.
Increase access to credit
Lack of collateral and credit history impact MSMEs who are looking to access credit from traditional banks. In a situation like this, there are competent players in the NBFC and FinTech sectors that can help solve this problem from its roots. Fintech platforms allow simplified and smooth loan application and disbursal processes and can fill the gap by forming and maintaining a mutually favourable relationship with MSMEs. The emergence of the Open Credit Enablement Network (OCEN), Open Network for Digital Commerce (ONDC), GeM Portal, and other similar networks are likely to impact the future of MSME lending in India significantly.
Education and training
There is hesitation regarding the adoption of the latest technology by the MSMEs due to their lack of understanding and knowledge in terms of selecting the correct technology solution for their enterprises. Technology can help MSMEs in rural India to access training and education, improving skills and knowledge and enabling them to innovate and compete. Digital technology can significantly enable India’s MSME segment to gain awareness regarding infrastructure and help improve efficiency, reduce costs and expand market reach, at domestic and international levels.
Digitisation and new-age technologies are set to become more ubiquitous in the near future. Increased adoption of technology is necessary for the rural MSME sector to contribute significantly to the economy and overcome the challenges related to physical infrastructure bottlenecks, absence of formalisation, low credit access, lack of backward and forward linkages and the perennial problem of delayed payments. It is time to shed the traditional and conventional methods of businesses and adopt an updated and contemporary business to become more efficient, gain more trust from consumers and stand high over the competition.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house
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