MSMEs in Indian Economy: Challenges & Opportunities

Is Indian economy really going through a slowdown? MSMEs defy this myth! See how MSMEs are emerging as a game changes in the Indian Economy! Reveal more detail about MSMEs and their operations trends in this detailed story! startup story

Shreshtha Verma
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MSMEs in Indian Economy Challenges and Opportunities

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Micro, Small, and Medium-Sized Enterprises (MSMEs) in India have emerged as the backbone of the economy, driving growth, innovation, and employment. Interestingly, startup and MSME industy trens clearly defy the slowdown conversation. 

Borzo, a global intra-city delivery service, reveals since last year, 56% MSMEs have experienced a business growth of 20-30%, debugging slowdown debate.

MSME Leadership and Challenges

Borzo revealed that a significant proportion of MSMEs, approximately three-fourths, are led by business owners, underscoring the entrepreneurial spirit within this segment. MSMEs are often led and driven by business owners. 26% of MSMEs are led by various managers in the roles of operations/logistics managers, sales managers, and marketing managers, highlighting the diverse range of leadership involved in MSME operations.

However, challenges abound for MSMEs, with customer acquisition, recruitment, packaging, and inventory management emerging as the top pain points. These hurdles often impede the smooth functioning of MSMEs, hindering their growth potential.

MSME Challenges

  • Amongst the key pain points faced by MSMEs, Customer Acquisition is a prominent challenge as 16% MSMEs cite it to be a big pain point. At 13% Recruitment is another big challenge hindering MSMEs. Packaging and Inventory Management at 12% and 11% respectively pose significant operational challenges for MSMEs.
  • Debtors/Payment Collection at 8% and Lack of Financing at 5% are a hindrance to the cash flow of MSMEs. In addition to this, various other pain points such as Operational efficiency, Pricing and margins and Competition are some of the other challenges that MSMEs have to navigate.

“At Borzo, we hold the belief that the SME sector constitutes the foundation of the Indian economy. From the bustling streets of Mumbai and burgeoning markets of Delhi, to the buzzing Tier 2 cities, MSMEs stand as pillars of innovation and growth. While challenges such as financing, sales and customer acquisition, inventory management persist, MSMEs are also embracing the need for  sustainable packaging, precise, and cost-effective same-day deliveries to meet evolving customer demands. Companies allied to serving MSMEs need to envision and ensure that MSMEs thrive amidst evolving processes and technology and are gaining significant knowledge to do so. Given the diverse nature of cities, varying routes, and delivery requirements, MSMEs need robust logistics assistance to fuel their expansion.”, Mr. Eugene Panfilov, Managing Director, Borzo India and Regional Director, Borzo, Brazil.

MSMEs Business Operations

MSMEs exhibit a diverse range of operations, catering to multiple cities across the country. While metros like Mumbai, Delhi, and Bangalore remain key destinations for shipments, smaller cities such as Vadodara, Nagpur, and Kochi are also gaining traction among MSMEs. Intra-city deliveries dominate the landscape, with nearly half of the respondents indicating that more than 70% of their orders are within the same city.

Speed and quality are paramount for MSMEs when it comes to delivery services. A majority of MSMEs prefer deliveries within 60 minutes, emphasizing the importance of meeting customer expectations promptly. Despite facing various challenges, MSMEs have witnessed significant growth in shipment value, with 56% experiencing an increase of 20-30% since last year. Moreover, a staggering 78.6% of MSMEs believe that there is no slowdown in their business, attributing the surge in demand to their resilience and adaptability.

How MSMEs are going for Sustainability and Automation?

The study also highlighted the growing emphasis on sustainability among MSMEs, with two-thirds of them using sustainable packaging materials. Furthermore, there is a high adoption rate of supply chain automation, signifying MSMEs' willingness to embrace technological advancements to enhance efficiency and scalability.

Borzo Connect

In a bid to address the pain points faced by MSMEs and provide them with effective solutions, Borzo is organizing a large-scale conference titled Borzo Connect in Mumbai on June 21st, 2024. The event aims to bring together MSMEs and corporations, offering them networking opportunities and insights into industry best practices. With over 80,000 delivery partners serving the enterprise hyperlocal and SME segment in India, Borzo is poised to play a pivotal role in empowering MSMEs and fueling their expansion.