Sustainability mean to MSME?
From governments to
financial institutions there is a clear consensus that Micro, Small and Medium Enterprises (MSMEs) in India are a force to recon with. This segment contributessignificantly
to the Indian economy in terms of employment, output and exports.
In recent times, this segment is on the
cusp of disruptive change which will result in a higher and moreholistically sustainable
Various factors have been ensuring that
principles of sustainability are getting built into the functioning of
companies in this space. These include:
The implementation of GST
The advent of pan-India digitalizationon
many levels, Policies (financial and functional) that facilitate smaller
Most importantly, a shift in leadership
to younger, more tech-savvy entrepreneurs.
Beyond Jugaad economics
Until a decade ago, there was immense disparity
between the technology available to large corporates and smaller enterprises.
Access to information and funding was also skewed towards more established
firms. This led to a representative of the UN (René Van Berkel, Officer in
Charge/UNIDO Representative, India)to observe that Indian MSMEs preferred to
adopt what could be called jugaad economics or the use of low-cost
indigenous solutions, in many of their processes. This, as one can imagine,
delivered sub-optimal products and outcomes and encouraged a vicious circle of
widening the gap between larger and smaller enterprises.
However, during the
last few years, digitalisation and the fast-paced advancement in technology has
become a great leveller of the playing field.
It has made developments in the business arena more inclusive. Finance
is also becoming less of a constraint as access to formal financial sector
loans is growing on the back of fintech.
At the same time,
MSMEs are being run by younger, more tech savvy entrepreneurs who have access
to information – which in turn gives them access to funding, equipment,
know-how. This has reduced the length of the learning curve and unshackled them
from some of the handicaps that older entrepreneurs faced. At the same time,
most second and third generation enterprises are now moving into the hands of
younger leaders that are usually, once again, tech-savvy.
A ripple that will
Although the numbers
are still small, there is now a growing awareness amongst Indian MSMEs that opting
for sustainable solutions (environmentally and socially, in addition to
economically) does not hurt their business interests; in fact, in the long run,
Being part of a larger
eco-system, MSMEs are imbibing cultures of sustainability when they interact
with organisations that believe in responsible sourcing, responsible funding,
There is still a
trickling down from PE and VC funds that are moving towards ESG funding
(funding only companies that are responsible Environmentally, Socially and in
terms of Governance) towards second level lenders and manufacturers, who in
turn are lending to sourcing inputs from MSMEs that are responsible. This
transformation is just as imminent as the first ray of dawn and
will trigger a virtuous cycle of greater sustainability on all levels.
Ref for article: https://economictimes.indiatimes.com/small-biz/sme-sector/indian-msmes-shunning-jugaad-embracing-sustainability-inclusive-development-unido/articleshow/69821534.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst