Micro, Small, and Medium Enterprises (MSMEs) exert a substantial influence on India's economic trajectory. In the dynamic landscape of India's commerce, MSMEs are poised to leave an indelible mark, propelling online retail sales to unforeseen heights. They are also anticipated to surpass the forecasted growth rate and are poised to make a substantial contribution to online retail sales by FY27.
Let's dig deep to know why MSMEs are crucial and what is the forecast for their growth in online retail.
How Are MSMEs Shaping India's Economic Landscape?
As per a report by KPMG and the Confederation of Indian Industry (CII), these enterprises constitute a remarkable force, accounting for nearly 30% of the nation's GDP and a substantial 45% of its exports. Beyond these impressive figures, MSMEs assume a multi-faceted role, acting as drivers of socio-economic advancement, providers of livelihood to a staggering 110 million individuals, and potent agents in the reduction of economic disparities. Their significance further extends to the rectification of regional imbalances and the bridging of the rural-urban divide. Moreover, these enterprises play a pivotal role in furnishing cost-effective raw materials to bolster larger industries and their allied sectors.
Recognizing the pivotal contribution and untapped potential of MSMEs, Finance Minister Nirmala Sitharaman has allocated an unprecedented Rs 22,138 crore to the MSME Ministry in the Union budget for FY24, underscoring the government's commitment to fostering their growth and impact.
According to another report, India houses 100+ Startup Unicorns coming from diverse sectors of which E-commerce accounts for the highest share with as many as 23 startup unicorns. Some of the big e-commerce startups include - Flipkart, Nyka, Meesho and more.
What is the Projection for MSMEs in online retail?
A remarkable revelation from a comprehensive analysis conducted by Redseer Strategy Consultants projects that MSMEs will wield an estimated USD 50 billion contribution to the realm of online retail sales by FY27, surpassing even the most optimistic growth forecasts. This not only underscores the burgeoning prowess of these entities but also underscores their pivotal role in reshaping the nation's economic narrative.
How Are E-commerce Platforms Supporting MSMEs?
The report goes beyond just numbers and shows a close partnership that's changing the direction of MSMEs. One important discovery is the strong connection between these businesses and the growing e-commerce platforms. These platforms provide different kinds of help that have become really important, supporting MSMEs in many ways.
Being efficient is really important for success in today's business world. E-commerce platforms know this and have become like architects for making things smoother for MSMEs. The report gives us a big picture view of how these platforms are helping MSMEs in many ways to work better and be more efficient. It's like a symphony of efforts to make things run smoothly.
What is the Potential of MSMEs?
The realm of possibility, as underscored by the report, unfurls a tapestry where MSMEs stand as lynchpins of India's retail prowess. The curtain rises on a projection that heralds MSMEs commanding a staggering 65-75 percent share of the Indian retail market—a tapestry woven with the threads of innovation, resilience, and entrepreneurial mettle.
What Challenges Do Offline-Focused MSMEs Encounter?
As businesses grow and change, it's important to understand the difficulties that small and medium enterprises (MSMEs) face, especially those that mostly operate offline. These challenges include high costs and the complicated process of getting paid over a long time. These problems can be really tough to overcome. But shifting from offline to online ways of doing business can be like a light at the end of the tunnel. It gives a great opportunity to get away from these difficulties and move forward.
How has Digitalization helped MSMEs?
The online world provides a solution that boosts MSMEs with new energy and possibilities. Moving to online platforms frees up MSMEs, helping them get payments faster and reach customers around the world. This leads to more sales and less spending on marketing. These positive effects create a domino effect, causing many MSMEs to start using e-commerce platforms.
As India's online retail realm undergoes a renaissance, MSMEs emerge as the indomitable vanguard of this transformation. A growing cohort of these enterprises are assuming the mantle of sellers on e-commerce platforms, perpetuating an unassailable cycle of expansion. The resultant effect unfurls like a symphony—the resonance of a broadened customer base harmonizing with the crescendo of online retail's ascendancy.