‘Implement ICT in Phases to Transform the Indian MSME Sector’

We spoke to Shreekant Somany, Chairman, CII-National SME Council and Milon K. Nag, Co-Chairman, CII National SME Council about the countless impediments in ICT adoption by Indian MSMEs and also the various methods to implement them in a structured manner. Here are the key takeaways

Alatest survey report by Ministry of MSMEs reveals that there are over 51 million SMEs spread throughout the geographical expanse of the country. These enterprises contribute around 38 per cent of the national GDP, 40 per cent of the overall exports and 35 per cent of the total industrial output. To spread the development of SMEs in the country, a technologically vibrant and internationally competitive SME sector should be encouraged for sustainable contribution to the national income, employment and exports.

Shreekant Somany
Shreekant Somany, Chairman, CII-National SME Council

“ICT firms are hesitant to offer products and services tailored to suit the needs of SMEs owing to low demand and the low demand from SMEs is consequent, at least in part, of the complex and expensive ICT tools in the market.”

Opportunities and Challenges to Adopt ICT

The rampant spread of Information and Communication Technologies (ICT) and the rapidly decreasing prices for the uptake of new technologies are making SMEs take note of the latest solutions and services on offer. Most Indian SMEs operate in a fiercely competitive environment. Effective use of ICT solutions can significantly improve their productivity, decrease their transaction costs and enhance their access to global value chains. The use of ICT at various stages assists in simplifying business processes and transactions as well as improving information and knowledge management for better decision making.

Milon K. Nag
Co-Chairman,
CII National SME Council

“To encourage SMEs to adopt ICT, a focused approach is required with an aim to educate SMEs about the benefits of adoption of these technologies, which include significant cost savings as well as opportunities to enable expansion to new markets.”

“A host of factors, such as insufficient financial resources to adopt new technologies, lack of experience in the adoption of various ICT tools, limited access to skilled manpower adept at handling new technologies, etc curtail Indian MSMEs from availing of the various advantages of advanced ICT tools and solutions,” said Somany. Another key cause for the low adoption of ICT tools by SMEs is the lack of dynamism between ICT firms and SMEs. ICT firms are hesitant to offer products and services tailored to suit the needs of SMEs owing to low demand and the low demand from SMEs is consequent, at least in part, of the complex and expensive ICT tools in the market. This creates a demand and supply gap preventing SMEs from benefitting from ICT products and solutions.

According to research, the revenues of IT-enabled SMEs grew 15 per cent faster and created twice as many jobs as compared to those that used less ICT technology. Adoption of latest ICT tools by Indian SMEs can compound the overall revenues of the sector by Rs. 3 lakh crore and create 11 lakh new jobs. This further increases the importance of promoting the use of advanced ICT solutions within the Indian MSME sector.

Government Interventions for Supporting ICT Usage by SMEs

Cognizant of the multiplier effect that ICT can have on the growth potential and global competitiveness of Indian MSMEs, the Ministry of MSME has initiated a number of measures to enhance the usage of ICT by SMEs. The Ministry operates the Scheme for the Promotion of ICT in MSME Sector to encourage and assist MSME clusters to adopt ICT tools and applications. The announcement of MUDRA Bank; the ATAL Innovation Mission (AIM) which is an Innovation Promotion Platform involving academics, entrepreneurs and researchers, etc. are all exhibits of the government’s commitment to promote ICT penetration in this sector.

CII’s Role in Promoting ICT Usage by SMEs

CII’s has been working synergistically with the government to enhance ICT adoption by SMEs. It has been conducting seminars and road shows in Tier II and Tier III cities to increase the awareness of SMEs on ICT solutions and their effective usage. CII has also organized various knowledge sharing sessions among key government officials in order to deliberate a conducive framework for ICT adoption by SMEs. Various recommendations have been submitted at multiple forums in this regard. The CII National SME Council is organizing multiple road shows across the country in partnership with IT experts and technological solution providers to highlight the most appropriate technologies for SMEs and raise their awareness on the solutions available and their optimal use. “Further, we have been working to facilitate partnerships and interactions amongst all stakeholders, including SMEs, technical partners and government officials, to improve technological penetration in the SME sector, said Nag.”

Conclusion

To encourage SMEs to adopt ICT, a focused approach is required with an aim to educate SMEs about the benefits of adoption of these technologies, which include significant cost savings as well as opportunities to enable expansion to new markets. In cases where SMEs are aware of the potential benefits of ICT, they are unsure of identifying and adopting the technologies that are best suited to their needs. Awareness sessions on the technological interventions that have the caliber to enhance the global competitiveness of Indian SMEs can be a crucial tool to boost the use of ICT by SMEs. It is also equally imperative for SMEs to continuously upgrade their ICT systems which are reliant on the availability of low cost ICT solutions as well as reliable support services. The government and industry must work in tandem in order to facilitate the spread of the ICT revolution in the SME sector.