Care in Crisis: Precautionary steps to be taken by small business owners against COVID-19

During these unprecedented adverse times, the focus of SMEs should remain on staying safe, supporting their customers to keep the wheels of earning turning.

The novel Coronavirus has forced the entire world to adapt to change quickly. After a considerable lockdown period, workplaces in India are taking a large number of precautions for their employees in the unlock phase.

COVID-19 pandemic has put the spotlight on the renewed need for hygiene and overall facility management to deal with new set of challenges.

While large businesses have the infrastructure and funds to put safety facilities in place, it is the small businesses that face the existential threat and cannot remain closed for long. They are often financially fragile, with little cash or resources.

For small businesses to resume operations, and once again serve as an engine to economic growth, they need to take some precautionary measures for the safety of their staff.

  1. Sanitization and regular cleaning of offices, factories, restaurants, shops, or business facilities is important. For this, following cleaning and disinfecting measures can be followed:
  • Wear disposable gloves to clean and disinfect.
  • Clean surfaces using soap and water, then use disinfectant.
  • Practice routine cleaning of frequently touched surfaces.
  • Surfaces and objects in public places that are touched frequently, such as shopping carts and sale counter keypads should be cleaned and disinfected before each use. Apart from this, high touch surfaces at workplaces include railings, tables, doorknobs, light switches, countertops, handles, desks, phones, keyboards, toilets, faucets, sinks, etc.
  • While disinfecting hard surfaces, keep solution on the surface for at least 1 minute.
  • Electronic equipment at the workplace, such as tablets, keyboards, remote controls, and ATM machines should be wrapped with a wipeable covering.
  1. Make sure that you staff washes their hands at regular intervals, wears gloves and masks, especially if they are facing customers.
  1. Seating arrangement at your facility should be such that two employees have at least 6 feet distance. For shops and stores, ensure that your staff is available for assistance, and customers touching the products is minimal.
  1. Ascertain that the clothes or uniform worn by your staff is washed and sanitized every day, and their temperature using infrared thermometer is checked before they enter the facility.
  1. If your staff is delivering goods to households, practice a no-contact delivery, wherein the delivery executive should be advised to keep the goods at a distance for the receiver to pick them up.

However, disinfecting the more-exposed surfaces is just not enough. Exercising easy communication to educate workers about identifying the symptoms of COVID-19 is equally important. Explain the importance of washing hands, wearing masks and gloves, and cooperating with ASHA workers who visit the house or store to conduct tests for coronavirus symptoms. Also, instructions on what to do if they develop symptoms within 14 days after their last possible exposure to the virus must be provided.

On Premise precautions

It cannot be denied that one of the prime sources of exposure to COVID-19 for small business owners could be their buyers, sellers, or supply chain staff. It needs to be understood that it is not just one person but the whole ecosystem at the back end around the individual, which consists of their family who have to be safeguarded.

To do this, business owners can take the below mentioned steps:

  • Monitor delivery and supply chain staff: Temperature check or thermal-scanning before entering the facility should be made mandatory for staff and customers.
  • Protective gear: Masks and hand gloves must be worn by the staff that is into customer facing roles. Customers must also be asked to wear masks covering their nose and mouth. Also, shoe covers should be provided to the customers while entering the malls, marts or supermarket.
  • Sanitization booth: A supermarket or a mall that allows customers to help themselves should install sanitization booth with foot pumps for people to pass from or place contactless sanitizer dispensers in order to minimize the spread of virus. Also, a PPE clad security person can be appointed to ensure that people are adhering to the guidelines, post which, used PPEs should be responsibly disposed.
  • Social distancing: Healthy distance of at least 4 to 6 feet should be maintained from the customer by creating a sealed area right in front of your counter/sales staff facing spaces.
  • Make Arogya Setu App installation mandatory for people entering your premises: Aarogya Setu App is a COVID-19 tracker launched by the Government of India. It keeps the user informed if they have crossed paths with the positive COVID-19.
  • Promote online payment: Instead of using cash for receiving or making payments, modes of digital payment like mobile banking, internet banking, cards, etc. should be encouraged.

Precautions while dealing with customers

International MSME Day 2020: Navigating the ‘New Normal’ Together

Small businesses play an important role in the economy. Not only do they outnumber large firms considerably, but employ vast numbers of people as well. The International MSME day was initiated in order raise awareness about the importance of supporting the development of small and mid-sized businesses in developing countries.

Definition of an Indian MSME:

An independently owned and operated enterprise that is created for profit and sells products that are needed by customers in the local market is referred to as an MSME (micro, small and medium enterprise), which in Hindi translates to लघु, छोटे और मध्यम व्यापार.

On 13th May 2020, Finance Minister Nirmala Sitharaman added additional criterion of turnover along with investment to define enterprises as MSME. This definition was announced under the Atmanirbhar Bharat Abhiyaan to facilitate MSMEs to grow in size and help them deal with the difficulties brought upon by the pandemic and the ensuing lockdown.

The definition, however, got further revised on June 1, 2020 on representations that the revision is still not in tune with the market and pricing conditions and should be revised upwards. As per the revised definition, medium enterprises got redefined as businesses with up to ₹50 crore in investment and up to ₹250 crore in turnover.

This step will help attract investments and create more jobs in the MSME sector. The following table provides details of the revised limits:

CategoryOld CapitalOld TurnoverNew CapitalNew Turnover
Micro₹25 Lakh₹10 Lakh₹1 Crore₹5 Crore
Small₹5 Crore₹2 Crore₹10 Crore₹50 Crore
Medium₹10 Crore₹5 Crore₹50 Crore₹250 Crore

Why is MSME day observed?

Observed on the 27th of June every year, the International Micro, Small and Medium Enterprises (MSME) celebrates the magnanimous contribution of smaller companies in construction of the foundation and growth of the global economy.


In 2017, to recognize the importance of micro, small and medium enterprises in promoting innovation, creativity and employment for all, and to root for achieving the 2030 Agenda for Sustainable Development (focusing on people, planning and prosperity), the United Nations General Assembly declared 27 June as International MSME Day.

Significance of the MSME sector

Micro, Small and Medium Enterprises (MSMEs) play a major role in most economies, particularly in developing countries. They represent about 90% of businesses and generate employment for more than 50% of the world’s population. Moreover, MSMEs contribute up to 40% of the national income (GDP) in developing economies and create 7 out of 10 jobs worldwide. But what hinders MSME growth is access to finance. It cannot be denied that MSMEs largely depend on internal funds, or cash from friends and family, to launch and run their enterprises rather than opting for bank loans. The International Finance Corporation (IFC) estimates that 65 million firms, or 40% of micro, small and medium enterprises (MSMEs) in developing countries, have an unmet financing need of $5.2 trillion every year. The prominent MSME markets are East Asia And Pacific, Latin America and the Caribbean, Europe, and Central Asia.


The MSME Landscape in India:

  1. There are 42.50 million, registered & unregistered MSMEs in India, this accounts for a staggering 95% of the total industrial units in the country.
  2. MSMEs in India employ about 106 million people, that is, 40% of India’s workforce – second to the agricultural sector.
  3. Indian MSMEs produce more than 6000 products.
  4. They currently contribute around 6.11% of the manufacturing GDP and 24.63% of the service sector GDP.
  5. MSMEs produce 45% of the total Indian manufacturing output.
  6. MSME exports are approximately 40% of total Indian exports.
  7. MSMEs account for 16% of bank lending and their fixed assets total ₹1,471,912.94 crore.


Stimulus packages for MSMEs from across different nations

The Covid-19 relief package for micro, small and medium enterprises are aimed at liquidity infusion at this juncture. Here are the top 5 countries that have announced stimulus packages for MSMEs to help them tide over the COVID-19 lockdown-induced crisis.

Japan: The 31.9 trillion yen budget will fund a 117 trillion yen ($1 trillion) economic stimulus package, that will help fight the economic impact of the novel Coronavirus pandemic. It would be the world’s largest stimulus package of $2.18 trillion for a Coronavirus-hit economy, as they have already spent nearly $1 trillion to restore the adverse effects of the pandemic. The total package would amount to 40% of the country’s Gross Domestic Product.

USA: The House of Representatives in the USA approved a $483 billion stimulus plan on top of a $2.2 trillion package, followed by a half a billion dollar stimulus. This money will back small businesses on the brink of bankruptcy, and hard-pressed hospitals. The package is necessary to ensure that small businesses have access to the resources they need.

Sweden: The central government of Sweden has guaranteed that 70% of new loans banks be provided to the companies experiencing financial difficulty due to the COVID-19 virus. This loan guarantee will primarily target small and medium-sized enterprises. Also, the Swedish National Debt Office will administer the guarantee and it is proposed that each company be allowed to loan up to SEK 75 million, although exceptions can be made.

Germany: A package worth up to 750 billion euros ($808 billion) to mitigate the damage of the Coronavirus outbreak on the economy has been announced. The relief measures by Germany include funds of up to 100 billion euros which can be used to take direct equity stakes in companies as a way to foil foreign takeovers. It also includes another 100 billion Euros in credit to public sector development bank KfW for loans to struggling businesses. The stability fund will offer 400 billion Euros in loan guarantees to secure corporate debt at risk of defaulting, taking the volume of the package to up to 750 billion euros. The extra budget includes a 50 billion Euro program to help small businesses and the self-employed threatened with bankruptcy by the Coronavirus crisis, with direct payments of up to 15,000 euros depending on the size of the firm.

India: The Atmanirbhar stimulus package of ₹20 Lakh Crore is designed to offer fiscal and monetary support to ease running of businesses. Moreover, to save the lockdown-battered economy, the stimulus package includes tax breaks for small businesses and incentivises domestic manufacturing. The combined package works out to roughly 10% of the GDP, making it among the more substantial stimulus packages in the world. (

Comparison of Global Coronavirus Stimulus Packages

Trends shaping the growth of MSMEs in a post COVID19 world

Over the last few months, the COVID-19 crisis has dealt a severe shock to economies across the world. It has triggered certain trends that will change the way of doing business in the near and long term, and will help shape the growth of MSMEs.

Accelerating trends in the wake of the COVID-19 crisis:

> Digitisation: Digital tools will become popular in both the B2C and B2B space, and there will be a shift of venture capital focus from service centric businesses to deep tech companies. MSMEs and start-ups, therefore, need to build solid digital capabilities and digitise parts of their business model. Besides this, expansion into new sales channels is also the need of the hour. Consumers will require goods even amidst lockdowns. Thus, creating opportunities to serve one’s markets through alternate sales channels, such as expanding to e-commerce via platforms like SOLV and boosting one’s online-marketing efforts is critical. (

> Rise of the locally produced goods: Reliance upon foreign sources for getting technologies or weapons will see a decline, and the domestic market is expected to surge owing to a decline in global trade. That’s because the decline in global trade due to restrictions on international shipping and travel will see a rise in demand for goods manufactured entirely locally. Manufacturers will also have to look at backward integration of their supply chains.

> Changing consumer demands and expectations: Coming of age, consumers will become more prudent and health conscious, and businesses need to cater to their changing demands and expectations. Operating as earlier won’t suffice.

> Need for upskilling and reskilling: In the post COVID world, MSMEs will need to adopt new technologies and new ways of working in order to survive and compete. Governments will need to develop specialized institutes and training programs to create a pool of skilled resources in order to help local industry.

> Limited availability of finance: Disposable income will be impacted and investors will look for safer and low risk investments. As a result, MSMEs will end up relying on Government-backed funding mechanisms.

In the light of uncertainty, it is important to stabilise and explore. While there is no single path forward for all, MSMEs should follow a few basic tenets:

  1. Stabilise one’s core offering and explore new adjacent areas to venture into
  2. Leverage local subsidies, revisit the supply chain, and focus on cash management
  3. Analyse ways to change the value proposition, delivery channels and target new customer segments

सूक्ष्म , लघु और मध्यम उद्यम और कोरोना वायरस

प्र1. COVID19 के प्रकोप का भारतीय अर्थव्यवस्था पर, विशेष रूप से छोटे और मध्यम व्यवसायों पर क्या प्रभाव है?

कॉरोनोवायरस के प्रकोप को रोकने के लिए भारत में वैश्विक संगरोध और 5-सप्ताह के राष्ट्रव्यापी लॉकडाउन ने उद्योगों को प्रभावित किया है और ऑपरेशन सचमुच एक ठहराव में आ गए हैं। ये कुछ क्षेत्रों में घरेलू और बाहरी मांग के झटके, उत्पादन बंद और नौकरी के नुकसान के साथ अभूतपूर्व समय हैं। भारतीय अर्थव्यवस्था से महामारी 100+ bn USD मिटाए जाने की संभावना है

भारत में MSME क्षेत्र में प्रभाव और भी अधिक बढ़ गया है जो कृषि क्षेत्र के बाद दूसरा सबसे बड़ा नियोक्ता है और अर्थव्यवस्था की रीढ़ है। घरेलू बिक्री में 90% की गिरावट आई है और आपूर्ति श्रृंखला में रुकावट और श्रम के मुद्दे लाखों नौकरियों को खतरे में डाल रहे हैं, जिसके परिणामस्वरूप लाखों टन वस्तुएं जैसे गेहूं, दालें और चावल और खराब होने वाली आवश्यक वस्तुएं बर्बाद हो रही हैं और खाद्य मुद्रास्फीति के स्तर को खतरे में डाल रही हैं। रिकॉर्ड ऊंचाई।

हाल ही में एसओएलवी में, हमने अपने मंच पर एसएमई के साथ एक अध्ययन किया और पाया कि उनमें से ज्यादातर हेडकाउंट में कमी जैसे गंभीर उपायों पर विचार कर रहे हैं, और आगे उनके संकटों को बढ़ा रहे हैं। यदि वर्तमान परिदृश्य जारी रहता है, तो 90% से अधिक एसएमई के पास केवल 3 महीने तक बनाए रखने के लिए कैशफ्लो हैं और उनमें से एक महत्वपूर्ण संख्या जो पहले से ही ऋणी हैं, शायद अपनी वर्तमान देनदारियों को सेवा देने में सक्षम नहीं होंगे।

प्र2. एसएमई क्षेत्र को बचाने और उन्हें संकट से निपटने में मदद करने के लिए क्या किया जाना चाहिए?

COVID संकट शायद एक बार एक सदी के Black Swan घटनाओं में है जिससे हम सभी को मिलकर निपटना होगा। विश्व बैंक और IFC की तरह विश्व स्तर पर अन्य प्रमुख सार्वजनिक और निजी क्षेत्र के बैंकों के साथ सरकारों और संस्थानों ने एसएमई क्षेत्र को अपने श्रम को बनाए रखने और कम से कम 6 महीने तक अपने संचालन को बनाए रखने में मदद करने के लिए प्रमुख प्रोत्साहन पैकेजों की घोषणा की है। भारत में, वित्त मंत्री ने एमएसएमई के लिए ऋण राहत उपायों की घोषणा की और आरबीआई ने प्रमुख ऋण सहजता और तरलता निवारक उपायों की घोषणा की है और बैंकों और छाया बैंकों को आपातकालीन क्रेडिट लाइनें खोलने का भी निर्देश दिया है। कई अन्य महत्वपूर्ण उपाय हैं जिन्हें नीति निर्माताओं द्वारा इस संबंध में किए जाने की आवश्यकता है जैसे कि जुर्माना मुक्त ब्याज भुगतान का विस्तार करने के लिए वित्तीय संस्थानों को प्रोत्साहित करना, परिश्रमी एसएमई को कार्यशील पूंजी पर ब्याज उपविभाग बनाना और इन असाधारण में इस खंड का आकलन करने के लिए वैकल्पिक क्रेडिट स्कोर को अपनाना। बार। एसएमई को वित्त के लिए समय पर पहुंच की भी आवश्यकता होती है। विकास वित्त जिसे अब भारत की ओर निर्देशित किया जा रहा है, को एसएमई क्षेत्र में प्रभावी रूप से प्रसारित करने की आवश्यकता है। इसके अतिरिक्त, बड़ी फर्मों से समय पर भुगतान और संग्रह सुनिश्चित करने के लिए, उन्हें TReDS प्लेटफॉर्म पर ऑनबोर्ड करने के लिए प्रोत्साहित / अनिवार्य किया जाना चाहिए कि यह रुपये के लिए कैसे किया गया है। परिधान खंड में 500 करोड़ + टर्नओवर कॉस।

यदि प्रतिकूलता को एक अवसर में बदल दिया जाए, तो अब से अधिक उपयुक्त समय नहीं हो सकता है। सरकार द्वारा एक बड़ा धक्का, ऋण प्रवाह, जनशक्ति मुद्दों, खराब बुनियादी ढांचे और प्रौद्योगिकी और डिजिटल अंतराल जैसे बुनियादी मुद्दों को संबोधित करने के लिए न केवल इस संकट में एसएमई का समर्थन करेगा, बल्कि उन्हें मजबूत बनाने में भी मदद करेगा।

प्र3. एसएमई को क्या करना चाहिए?

अधिकांश एसएमई ने पहले से ही सभी विवेकपूर्ण खर्चों को रोककर नकदी प्रवाह की रक्षा करने के लिए और अधिक अभिनव बनने के उपायों को अपनाना शुरू कर दिया है, और प्रौद्योगिकी समाधान ढूंढ रहे हैं जो उन्हें अपने पहुंच को बढ़ाने और नए ग्राहकों और पैमाने हासिल करने में मदद कर सकते हैं। यह एसएमई के लिए एक दूसरे के साथ डिजिटल रूप से जुड़ने का एक उपयुक्त समय है और पहले और सबसे पहले इस बात से अवगत रहें कि उनके क्षेत्र में क्या हो रहा है, नीतिगत उपायों को लागू किया जा रहा है और कैसे वे इनका लाभ उठा सकते हैं ताकि स्थिति का सर्वश्रेष्ठ बना सकें। इसके अलावा, एसएमई के लिए वैकल्पिक उधार का लाभ उठाने और विकास पूंजी के लिए अपने क्रेडिट प्रोफाइल में सुधार करने के लिए यह बहुत अच्छा समय है जिसे जल्द ही बढ़ाया जा सकता है।

प्र4.  सोळव – एक B2B डिजिटल प्लेटफ़ॉर्म एसएमई की मदद करने के लिए क्या कर रहा है?

सोळव के अस्तित्व का बहुत आधार एसएमई को बढ़ने में मदद करना है। सोळव एक वाणिज्य मंच है जो देश भर में छोटे व्यवसायों को जोड़ता है और उन्हें एक मंच, भुगतान, रसद और एंड-टू-एंड पूर्ति के साथ समर्थन करके एक दूसरे के साथ व्यापार करने में मदद करता है।

हम समझते हैं कि इस समय के लिए इस समुदाय के लिए हमारी सेवा अनिवार्य है। COVID-19 लॉकडाउन के संबंधित प्रभावों में से एक आवश्यक आपूर्ति की कमी है। लाखों नागरिक इस बात से चिंतित हैं कि वे अपनी रोजमर्रा की आवश्यक जरूरतों को कैसे पूरा करेंगे। जहां ई-कॉमर्स खिलाड़ी ऑर्डर में अचानक उछाल का सामना करने की पूरी कोशिश कर रहे हैं, वहीं कई छोटे किराना ने ऑनलाइन-ऑफलाइन हाइब्रिड मॉडल के संचालन का भी विकल्प चुना है। वे सोळव जैसे प्लेटफ़ॉर्म का लाभ उठा रहे हैं, जो इस समय उन्हें उन व्यावसायिक सेवाओं का समर्थन करते हैं जिनकी उन्हें आवश्यकता है।

छोटे किरणों के लिए, उत्पादों की बड़ी आपूर्ति श्रृंखला में दोहन सबसे अच्छे समय में और विशेष रूप से संकट के समय में एक चुनौती है। इसलिए परिवहन और श्रम की खरीद कर रहे हैं, जो अभी बहुत कम आपूर्ति में हैं। जब भारत COVID-19 के खिलाफ लड़ाई में लॉकडाउन में चला गया, तो आवश्यक सामान, जैसे कि किराने का सामान, ताजा उत्पादन और दवा तक पहुंच बाधित हो गई। भारत की आपूर्ति श्रृंखला प्रभावित हुई और छोटे स्थानीय खुदरा विक्रेता और ग्रॉसर्स बड़े निर्माताओं, व्यापारियों और थोक विक्रेताओं के कनेक्शन के बिना आपूर्ति की खरीद करने में असमर्थ थे। छोटे किरणों के लिए, उत्पादों की बड़ी आपूर्ति श्रृंखला में दोहन सबसे अच्छे समय में और विशेष रूप से संकट के समय में एक चुनौती है। इसलिए परिवहन और श्रम की खरीद की जा रही है, जो COVID-19 के नेतृत्व में बंद के दौरान गंभीर रूप से कम आपूर्ति में थे और एक समस्या को जारी रखते हैं क्योंकि अर्थव्यवस्था धीरे-धीरे लॉकडाउन से वापस आ गई है।

सोळव अपने नए तरीकों से एसएमई के लिए बी 2 बी वाणिज्य मंच का लाभ उठाकर इन चुनौतियों का समाधान करने के लिए लगातार नवाचार कर रहा है। हम अपने नेटवर्क और संसाधनों का उपयोग एक तरफ टियर 2 निर्माताओं और गांवों की सोर्सिंग इकाइयों से जुड़ने के लिए कर रहे हैं और दूसरी ओर वितरण चैनलों के लिए, किरणों, RWA, NGO और छोटे अस्पतालों को आवश्यक सामान पहुंचाने के लिए कर रहे हैं। हमारे एसएमई के माध्यम से हर दिन 20,000 से अधिक परिवारों को आवश्यक आपूर्ति की गई है।

सोळव ने लॉकडाउन की घोषणा के तुरंत बाद एमएसएमई के साथ 1: 1 साक्षात्कार भी आयोजित किया और अध्ययन के निष्कर्षों को प्रकाशित किया (जिसे टाइम्स ऑफ इंडिया ने भी उद्धृत किया था)। इस अध्ययन ने MSMEs पर COVID-19 संकट के प्रभाव के बारे में बहुत सारी अंतर्दृष्टि का खुलासा करने में मदद की और ऋण की तीव्र कमी जैसी चुनौतियों पर प्रकाश डाला। तब सोळव कम समय के भीतर ऐसी चुनौतियों के समाधान को लागू करने में सक्षम था।

सोळव ने हाल ही में FICCI-CMSME के ​​साथ MSMEs के लिए COVID-19 इमरजेंसी क्रेडिट लाइन प्रोग्राम शुरू करने की भी घोषणा की, जो देश को COVID-19 महामारी से लड़ने में मदद कर रहे हैं। कैश-फ्लो की कमी के कारण एमएसएमई सेगमेंट के लिए राष्ट्रव्यापी लॉकडाउन ने व्यापार स्थिरता को बुरी तरह प्रभावित किया है। इस परिदृश्य में, COVID-19 इमरजेंसी क्रेडिट लाइन का उद्देश्य MSME क्षेत्र द्वारा सामना किए जा रहे वित्तीय दर्द को कम करना है।


Micro, Small & Medium Enterprises (MSMEs) & COVID-19

Q1. What is the impact of COVID19 outbreak on the Indian economy, especially the small & medium businesses? 

Global quarantines and 5-week nationwide lockdown in India, to contain the coronavirus outbreak, have impacted industries across and operations have literally come to a standstill. These are unprecedented times with domestic and external demand shock, production shutdowns and job losses in some sectors. The pandemic is likely to wipe-out 100+ bn USD from the Indian economy

The effect is even more amplified in the MSME sector in India which is second largest employer after the agriculture sector and is the backbone of the economy. There’s been a  90% drop in domestic sales across categories and supply chain disruptions & labor issues are putting millions of jobs at risk, resulting in millions of tonnes of commodities like wheat, pulses & rice and perishable essentials getting wasted and risking food inflation levels at record highs.  

Recently at SOLV, we conducted a study with SMEs on our platform and found that most of them are contemplating severe measures like headcount reduction, further adding to their woes. If the current scenario continues, over 90% of the SMEs have cashflows to sustain them only for 3 months and a significant number of them who are already indebted, will perhaps not be able to service their current liabilities. 

Q2. What should be done to save the SME sector and help them weather the crisis? 

The Covid crisis is perhaps once in a century black swan events that all of us together need to tackle. Governments & institutions globally like the World bank & IFC along with other major public & private sector banks have announced major stimulus packages to help the SME sector retain their labor and sustain their operations for at least 6-month. In India, the Finance minister announced a slew of debt relief measures for the MSMEs and the RBI has announced major credit easing and liquidity infusing measures and has also directed banks & shadow banks to open emergency credit lines. There are several other significant measures that need to be taken in this regard by the policymakers like incentivizing financial institutions to extend penalty-free interest payment, make interest subventions on working capital to diligent SMEs and adopt alternate credit scores to assess this segment in these extraordinary times. SMEs also need to have timely access to finance. Development finance which is being directed towards India now, needs to be channeled effectively into the SME sector. Additionally, in order to ensure timely payments & collections from large firms across, they must be incentivized/ mandated to onboard on the TReDS platform similar to how it has been done for Rs. 500 cr+ turnover cos in the apparel segment. 

If an adversity can be turned into an opportunity, there cannot be a more opportune time than now. A big push, by the government, to address fundamental issues such as credit flow, manpower issues, poor infrastructure and technology and digital gaps will not only support the SMEs in this crisis but will also help them emerge stronger.

Q3. What should SMEs do?

Most SMEs have already begun adopting measures to become leaner and more innovative, to protect cash flows by stopping all discretionary spends, and finding technology solutions that can help them increase their outreach and acquire new customers and scale.  It is an opportune time for SMEs to connect with each other digitally and first & foremost be aware of what’s going on in their sector, policy measures being put in place and how they can leverage these to make the best of the situation.  Also, it’s a great time for SMEs to leverage alternate lending and improve their credit profiles for growth capital that may be extended soon. 

Q4.  What is a B2B digital platform like SOLV doing to help SMEs?

The very premise of SOLV’s existence is to help SMEs grow. SOLV is a commerce platform connecting small businesses across the country and helping them trade with each other by supporting them with a platform, payments, logistics and end-to-end fulfilment. 

We understand that our service to this community is imperative in times like these. One of the related impacts of the COVID-19 lockdown has been the shortage of essential supplies. Millions of citizens are concerned about how they would meet their everyday essential needs. While e-commerce players are trying their best to cope with the sudden surge in orders, many small kiranas have also opted for an online-offline hybrid model of operations. They are leveraging platforms like SOLV, which support them with the business services they need acutely at this time.

For small kiranas, tapping into large supply chains of products is a challenge at the best of times and especially so in this time of crisis. So are procuring transport and labour, which are in very short supply now. When India went into lockdown in the battle against COVID-19, access to essential goods, such as groceries, fresh produce and medicine, was disrupted. India’s supply chains were impacted and small local retailers and grocers were unable to procure supplies without connections to larger manufacturers, traders and wholesalers. For small kiranas, tapping into large supply chains of products is a challenge at the best of times and especially so in this time of crisis. So is procuring transport and labour, which were in critically short supply during the COVID-19 led shutdowns and continue to pose a problem as the economy slowly limps back from the lockdown.

SOLV has been constantly innovating to address these challenges by leveraging its B2B commerce platform for SMEs in new ways. We are using the strength of our networks and resources to connect to sourcing units like tier 2 manufacturers and villages on the one hand and delivery channels on the other, to deliver essential goods to kiranas, RWAs, NGOs and small hospitals. More than 20,000 families have been supplied essentials through our SMEs every day.

SOLV also conducted 1:1 interviews with MSMEs on the platform soon after the lockdown was announced and published the findings of the study (which was also quoted by The Times of India). This study helped unveil a lot of insights about the impact of the COVID-19 crisis on the MSMEs and highlighted challenges like an acute shortage of credit. SOLV was then able to implement solutions for such challenges within a short period of time. 

SOLV also announced a partnership recently with FICCI-CMSME to launch a COVID-19 Emergency Credit Line Program for MSMEs that are helping the nation fight the COVID-19 pandemic. The nation-wide lockdown has badly hit business sustainability for the MSME segment due to the lack of cash-flows to meet their fixed cost. In this scenario, the COVID-19 Emergency Credit Line is aimed at easing the financial pain being faced by the MSME sector.

COVID-19 impact | Reviving post-lockdown MSME manufacturing

By Nitin Mittal

The need of the hour is clarity in policy communication by making it simple for the MSMEs, without leaving any room for subjectivity.

The COVID-19 pandemic has wreaked havoc on the economy. Taking steps to protect our industries and commerce is an immediate and critical need of the hour. To this end, the government recently announced its intention to spend almost 10 percent of India’s gross domestic product (GDP) in the fiscal year 2020 on economic relief measures towards reviving economic growth.

A sector that is reeling under the impact of the COVID-19 outbreak is the Micro, Small and Medium Enterprises (MSME), which contributes to around 35 percent of India’s manufacturing output. The MSME sector, which is also the second-largest employment generator in the country after agriculture, needs special attention from the government.

The stimulus package announced is a mix of fiscal support, monetary support, ease of conducting business processes, as well as some fundamental reforms. The need of the hour is clarity in policy communication by making it simple for the end beneficiaries, the MSMEs, without leaving any room for subjectivity, which needs to be urgently taken up by the central and state governments. For instance, the Finance Ministry’s notification in May, amending the General Finance Rules (GFR) 2017, disallows global tenders to encourage MSMEs to take part in tenders below INR 200 crores, but has bestowed power to respective departments in ‘exceptional case’ scenarios to consider global tender enquiry (GTE). Policies cannot be left to individual inference when a critical step in economic progress like quality sourcing is being sought from domestic players, especially the MSME sector which is gearing to be a major supply chain player for domestic and global markets.

To make this a reality, certain measures with respect to limiting imports may be a necessary step, at least for the foreseeable future. China, for example, is one of our top three trading partners and the trade deficit with the country has increased manifold over the last few years. To stem this, the Government of India proposed amendments in the Customs Act which gives it the power to ban import and export of certain items, “under exceptional circumstances”. These measures are intended to make our supply chains more self-reliant and less dependent on imports, but it is also important to remember the unparalleled scale and capability of manufacturing-driven countries like China; it will take significant policy interventions and drastic structural changes to match their scale, expertise and skills, to be globally competitive.

This is a feat that India is not new to; the challenge has previously been overcome successfully by the likes of the textile industry in India, which is the second largest exporter of textiles in the world. As a country, we must collectively find ways to extrapolate the success stories of the textile industry to other import-heavy industries, while also learning from its failures to kickstart growth in the new normal.

Here are some of the essential steps needed to get the manufacturing MSMEs back on track.

Financial incentives

  • RBI needs to immediately issue guidelines for higher provisioning revisions to banks, in the absence of which liquidity injection into the system is getting delayed
  • Instant availability of subsidies, with simplified processes for getting them without hindrance
  • Speedy cashflow issue resolution through GST refunds and short-term collateral free, low-interest loans to both large corporates and MSMEs

Article first published on:

What does the ₹20 lakh Crore “Atmanirbhar Bharat” Plan mean for Exporters and Importers?

The third set of economic stimulus announcement brought some favourable news for the importers and exporters of the country.

Agriculture Sector

As a part of the ₹20 lakh crore economic package, the amendment to the Essential Commodities Act was announced so as to deregulate the prices of potatoes, onions, cereals and pulses. It will ensure that stock limits on imports be imposed only during the times of unforeseen events or calamities.

Finance Minister Nirmala Sitharaman stated that creating a facilitative legal framework will enable farmers in engaging with processors, aggregators, large retailers and exporters in complete transparency. Additionally, this framework will also proffer assurance to farmers on the quality and price of agriculture produce while dealing with aggregators, retailers and the likes from across India. A budget of ₹1.63 lakh crore is allocated with an intent to mitigate the risk for farmers and promote quality standardisation.

In a nutshell, agriculture marketing reforms from the centre will be formulated to offer:

  • A barrier-free inter-state trade
  • Enough options to sell produce at attractive rates
  • Option to carry out e-trade of agriculture produce

Animal Husbandry and Fisheries Sector

The government has decided to launch a Pradhan Mantri Matsya Sampada Yojana for integrated, sustainable, inclusive development of marine and inland fisheries. This is aimed at sewing the critical gaps in the fisheries value chain and provide employment to over 55 lakh people.

To add on, this will help double exports to ₹1 lakh crore. Out of this, ₹11,000 crore will be set aside for marine, inland fisheries and aquaculture activities, and ₹9,000 crore will be allotted towards fishing harbours, cold chain, markets, to list a few.

A ₹15,000 crore Animal Husbandry Infrastructure Development Fund has been setup to encourage private investment in dairy processing and cattle feed infrastructure. Incentives will be given for creating plants for the export of niche products.

Coal Sector

There is a need for India to reduce import of substitutable coal and enhance its self-reliance in coal production. For this, government is introducing the commercial mining of coal with an investment of ₹50,000 crores.

Defence Sector

The FDI limit for the defence sector under automatic route will be raised from 49% to 74%. Additionally, FDI norms will be relaxed under the automatic route to attract overseas players in the sector.

Indigenization of imported spares used by the armed forces was announced. Any part that can be manufactured in India will not be imported. This will improve self-reliance on defence manufacturing under the Make in India scheme. This move will boost domestic manufacturing industry as India imports about 70% of its military hardware.

MSMEs towards Atmanirbhar India?

The recent announcements made by the government addressed creating demand for domestically manufactured products and promoting import substitution. In order to make that happen, the manufacturing sector in India needs additional labour force.

However, with the advent of COVID-19, the ‘new normal’ is the one where social distancing is practiced, leading to choppy supply chain and shortage of skilled workforce. With this becoming a permanent challenge, reliance on domestic industry might come across as a hitch.

To resolve this, preparation is needed, for which additional investment in infrastructure needs to be put in, such as, protective cells in assembly lines, PPE kits, safe ways for material handling. Perhaps a surgeon’s precision is required to mend the gaps between self-reliance and availability of funds.

AEPC speak

Apparel Export Promotion Council (AEPC) has favoured the decision to leave more money in the hands of companies announced as a part of ₹20 lakh crore economic package to make India atmanirbhar (self-reliant).

Leaving more money in the hands of companies will spur economic growth and boost their ability to fight the adverse scenarios caused due to the COVID-19. Moreover, the announcement of ₹3 lakh crore collateral-free automatic loans for MSMEs will help them get over the liquidity crunch and lack of working capital brought in by the lockdown.

The EPF benefit under Pradhan Mantri Garib Kalyan Package (PMGKP) of 12% contribution by employer and employee towards EPF accounts has been extended till August 2020. This will also help cover all the apparel exporting units that are highly labour intensive and have a huge women workforce.

Support measures from RBI

Export Credit: RBI noted the impact of COVID-19 on Indian exports and imports and decided to increase the maximum permissible period credit of post and pre-shipment to 15 months for disbursals up to July 2020.

Liquidity Facility for Exim Bank: Given that global trade has contracted owing to the COVID pandemic, the financial markets have turned highly volatile and risk averse. Since Exim Bank predominantly relies on foreign currency resources for its operations, that are raised from international financial markets, it is facing a challenge in the international debt capital markets. Thus, a line of credit worth ₹15000 crore has been extended by RBI to the EXIM Bank for a period of 90 days from the date of availing with the rollover facility of up to one year so as to enable it to avail a US dollar swap facility for fulfilling its foreign exchange requirements.

Time Extension for Payment for Imports: Thecross-border restrictions due to COVID-19 have imposed slowdown in manufacturing and sale of finished products. It has further led to delays in realisation of sale proceeds from domestic and international markets. This has stretched the operating cycle for business entities, and they are finding it hard to pay for their imports within the stipulated period under the Foreign Exchange Management Act (FEMA). Thus, for importers to manage their operative cycle, outward remittances against normal imports is bought down from 12 to 6 months.

₹20 lakh crore Economic Stimulus: What will Fund India’s Covid19 Recovery Package?

On Tuesday, May 12, 2020, the Prime Minister of India, Mr. Narendra Modi announced the much-awaited COVID stimulus package of ₹20 lakh crore, which is 10% of the country’s GDP. The question that everyone’s been asking since then – what will be the source of these funds?

We are hazarding some assumptions here: 

  • Reallocation of government spending
  • Tapping domestic private savings
  • Bond purchases
  • Foreign borrowings

The good news is that though the announcements made are worth ₹20 lakh crore, the actual cash outlay by the government and its effect on the fiscal deficit will be far less, at least in the immediate term. That is because, most of the proposals of the government are credit-focused, and others are aimed at easing liquidity concerns for the sectors impacted due to the pandemic. Any costs incurred will initially be covered by financial institutions and will not result in actual cash outflow by the Centre.

Reallocation of government subsidies

Most of the existing government spending goes towards the subsidies, for food, fertiliser and fuel. ₹70,000 crore of these subsidies can be released for increased fiscal spending.

Privatisation of PSUs

Government decided to use equity to raise private funds via large-scale privatisation of PSUs. Not only will this help in raising required funds but will also improve the efficiency ofpublic firms when run jointly by private investors.

The number of PSUs in strategic sectors will be maximum four, remaining will either be privatised or merged. As per the new public sector enterprise policy, all sectors will be open to private sectors and PSUs will play a significant role in defined areas.

Bond markets

In the near-term, the funding burden will fall on bond markets and for it to stabilise markets, RBI’s participation is of prime importance. Market borrowing is likely to rise by at least ₹7-10 lakh crore via domestic means and bond issuances. RBI will play a key role in stepping up bond purchases since absorptive capacity of domestic investors and foreign portfolio investors is limited.

Tax-free bonds

These may turn out to be a preferred investment option for retail investors who are seeking debt mutual fund schemes. These bonds will open a new avenue of participating in a government instrument free of tax.

Foreign borrowings

  • FCNR account deposits

In 2013, at the time of taper tantrum, RBI permitted foreign currency non-residents (FCNR) account deposits, which fetched an inflow of $30 billion in FCNR bank deposits and attracted huge funds from abroad. This strategy may be reimplemented. Moreover, given the fact international borrowing costs are likely to be low, we can be open to foreign currency debt.

  • FDI

Being open to equity investment by foreigners is a smart way to fund our current and urgent needs.

With this in mind; in the fourth tranche of government’s ₹20 lakh crore special economic stimulus package, Finance Minister Nirmala Sitharaman raised the Foreign Direct Investment (FDI) in defence manufacturing to 74% from 49% via automatic route and announced several measures to make defence production self-reliant in the country under Make in India.

Increase in Direct Taxes

Depending on increased taxes is not a great idea as it will only deplete private spending and lead to huge inefficiencies in implementation. Besides that, there is a need of not just the government expenditure but also private consumption and investment for the economy to recover.

India’s ₹20 lakh crore COVID-19 economic stimulus package: Impact on MSME sector

As a part of the ₹20 lakh crore stimulus package announced by the Prime Minister Narendra Modi to spur growth and help build a self-reliant India, Finance Minister Nirmala Sitharaman on Wednesday, 13 May 2020 announced a economic relief package. This package will act as a helping hand for businesses, including micro, small and medium enterprises (MSMEs) to recover from the impact of the Coronavirus (COVID-19) pandemic.

The finance minister reiterated the thoughts of the Prime Minister and said that self-reliant India / a Aatmanirbhar Bharat rests on five pillars: Economy, Infrastructure, Technology-driven systems, Demography, and Demand. Thus, factors of production, such as land, labour, liquidity, and laws will be focussed upon with an intention is to make local brands global.

Here are the key takeaways from the press meet.

For the revival of the MSME sector:

1. Unsecured loan of ₹3 lakh crores for MSMEs to be given. Though this, 45 lakh units can resume work and retain jobs.

2. Subordinate debt provision of ₹20,000 crore has been announced for 2 lakh MSMEs to help the stressed MSMEs.

3. Infusion of ₹50,000 crore equity via Mother-Daughter fund for MSMEs that require handholding. An additional fund with ₹10,000 crore will be set up to aid these units in expansion or list themselves on markets.

4. Definition of MSMEs has been revised to help MSMEs expand and avail benefits. Moreover, no distinction between manufacturing and services sector MSMEs will be there.

As per the new definition:
– Micro units with investment up to ₹1 crore and turnover up to ₹5 crore
– Small units with investment up to ₹10 crore and turnover up to ₹50 crore
– Medium units with investment up to ₹20 crore and turnover up to ₹100 crore

5. For government contracts, global tenders will be disallowed up to ₹200 crore.

6. E-market linkages to be provided across the board to make for the absence of non-participation in trade fairs due to the COVID-19 pandemic. The receivables will be cleared by the Government of India and PSUs in the next 45 days.

For the benefit of Employees:

7. A liquidity relief of ₹2,500 crore EPF support is being given to all EPF establishments. For the next 3 months, EPF contribution will be paid by the government till August. This will benefit over 72 lakh employees from both small and big enterprises.

8. Statutory EPF contribution for all organisations and their employees has been reduced to 10% from 12%, except for government organisations. The intent is to infuse ₹6,750 crore liquidity into these organisations.

Detailed information about FM’s press meet

Infusing money via collateral-free automatic loans, subordinate debt for MSMEs and equity infusion through MSME mother-daughter fund will amount to 76% the credit disbursed to MSMEs during FY20.

Regarding the credit and finance for the Indian MSMEs, the Finance Minister Nirmal Sitharaman announced the mega ₹20 lakh crore stimulus to bring the COVID-battered economy back to life. She stated that this financial package is roughly 10% the Indian GDP and offered measures to boost liquidity in MSMEs and assured the much-needed help for them to avail the benefits of the government schemes. On the lines of PM’s local to global mantra, she mentioned that this package will enable them to compete with foreign companies and help strengthen their network.

Banks and NBFCs will offer up to 20% of their entire outstanding credit as on February 29, 2020 as collateral-free loans. Under this, those units with outstanding credit of up to ₹25 crore and turnover of ₹100 crore can avail the loans, which will have four-year tenor and a moratorium period of 12 months beginning on principal payment. The scheme can be availed till October 31, 2020.

₹20,000 crore subordinate debt as equity support for MSMEs declared NPAs or stressed enterprises. The government will also provide ₹4,000 crore to CGTMSE for offering partial credit guarantee support to the banks lending to MSMEs.

₹50,000 crore equity infusion by government in MSME sector. This will be done through a Mother fund and a few daughter funds. This Fund of Funds will be set-up to offer equity based funding to growing and viable MSMEs. It will have a corpus of ₹10,000 crore.

Global tenders disallowed

Addressing the issue of unfair competition from foreign companies against MSMEs, the government said it will not allow global tenders in schemes up to ₹200 crore. The government is entrusting India’s backbone – the MSME ecosystem by facilitating procurement tendering.

Implications on the stock market

As per analysts, the relief package will be helpful in fixing supply-side rather than the demand issues.

The market on Wednesday, 13 May rallied in anticipation of a full ₹20 lakh crore stimulus, however, the FM said the announcements will be made in tranches over the next few days. This led to disappointment in the market because the immediate spend out of the big fiscal stimulus is relatively small, and there remains scepticism if the economy will revive soon.

Moreover, the FM refused to reveal entire funding details until all the announcements were made.

Impact on GDP

India has higher sovereign debt-to-GDP ratio than other emerging markets. And with hardly any GDP growth this year, the debt-to-GDP is likely to rise substantially in India.

MSME Speak

The MSME sector is unconvinced of the finance minister’s announcement regarding collateral-free loans as there is still a lot to be read in the fine print. Also, it is yet to be seen how banks roll out the loans, since implementation of announcement can have several gaps.

The collateral-free loans are expected to infuse liquidity in the sector and help stressed units address their cash crunch issues. This happens to be a critical move to help MSMEs kickstart business activities and provide job protection to employees.

Regarding the 2% rebate on Provident Fund, MSMEs feel, it is a small sum and will not help small companies but the big players. As MSMEs mostly have employee strength between 10 and 15 which are covered by PF, a mere 2% will not do any good.

Change in the definition of MSMEs is a welcome move as the upward revision in the investment limit of MSMEs will give an increased number of MSME units the access to institutional working capital.

Moreover, removal of global tenders is being taken positively as this would offer the sector better opportunities for growth without straining the government finances.

ADB’s support of $1.5 billion for Indian MSMEs

To aid Indian MSMEs fight COVID, Asian Development Bank (ADB) is likely to provide $1.5 billion for India’s economic recovery and industrial support particularly to MSMEs.

As per a statement issued by the Ministry of Finance, this relief fund will be a part of the ADB’s existing COVID-19 Active Response and Expenditure Support (CARES) programme that is being offered to India. The support will be facilitated through credit guarantee schemes, MSME integration into global and national value chains through enterprise development centres, and a credit enhancement facility for infrastructure projects.

Though the government has taken several relief measures to make this lockdown easy on small businesses and help them sustain the current period in liquidity and access to credit, this additional help will help revive the faltering MSME sector.

  • SIDBI recently announced 90-day term loans to NBFCs, MFIs, scheduled commercial banks, and small finance banks for offering loans to small businesses.
  • The government is also looking at enhancing the credit guarantee limit to MSMEs to ₹5 lakh crore from around ₹1 lakh crore currently.

ALSO READ: Relief measures by govt in view of COVID-19

The Corona impact would most certainly leave the MSME sector bruised. According to a survey done by Local Circles, over 74% small businesses and start-ups are expected to either shut down or scale down their operations in the next six months. Another survey conducted by them states that 47% of Indian start-ups and SMEs have less than 1 month of cash left, many are out of funds already.

ADB had earlier approved the loan to provide budget support to the government to tackle the adverse health and socio-economic impact of the pandemic. This additional boost of funds will help government strengthen the implementation framework and capacities of the MSME sector.

COVID-19 oubreak: Impact on HORECA segment

By Nitin Mittal – Founder & CEO, SOLV

Covid19 outbreak led shut-downs are having disastrous impact on economies around the world, including India. Small and medium businesses are the worst hit segment and among them the most impacted are the ones in travel, tourism and entertainment. With more than 1.3 bn people confined to their home in India, the HORECA sement which relies on the very premise of discretionary spends, business travels and people ‘socializing’ is strugging to survive.

Current scenario

With occupancies crashing to below 5% in comparison to 95% last year, hospitality industry is the worst hit.

Hotels, restaurants and cafes are capex heavy businesses, with high fixed costs like rents that comprise of almost 60% of the cost. Hospitality industry often witnesses 70% to 100% occupancy by the end of the February in India, however, this year, with the outbreak accelerating, the occupancy has gone down to a minimum. This is leading to hotels towards a shutdown or to operate in a very limited cash-crunched manner.

Dominoes Effect of Impact on HORECA Segment on other sectors

High-value food commodities (HVCs), such as milk, fruits and vegetables, and meat, fish and eggs, account for 56% of the total value of output from agriculture and allied sectors. Prices of agricultural and high value commodities have fallen by more than 20% since bulk demand from HORECA has plumetted and export scenario is uncertain.

With rumors around consumption of poultry and other livestock and hotels & restraunts cancelling orders, their breeding has hit a major roadblock too.

Firefighting the Trend

Hotel chains like Oyo are partnering with embassies to accomodate foreign traveller stuck in India, to ensure occupancy. Restaurants are reworking their menus, operating on delivery & takeaway models only, operating with limited set of chefs since most restaurant staff comprises of migrant workers especially in Mumbai, Delhi & Bangalore.

Expectations from the Government

  • The industry is looking for support to survive, in the form of pushing back of instalment repayment, support in paying salaries to the staff and waivers in government levies such as tax, ESIC, bank guarantees, security deposits, etc.
  • Rental renogiations basis state level mandates are sought
  • Doubling of working capital limits on interest free and collateral free terms will also be helpful in preventing businesses from going bankrupt.
  • FAITH has sought a support fund for 12 months on the lines of MNREGA to support basic salaries with direct transfers to affected tourism employees.
  • There’s also a demand of setting up of a national tourism task force under PM’s leadership to fast track all tourism investment proposals and to withhold the tax collected at source (TCS) on travel provision proposed in Finance Bill 2020 as TCS on travel will displace business from India to overseas markets.
  • CII’s recommendations include release of SEIS and EPCG schemes on an urgent basis based on last year’s submissions of foreign exchange earnings of companies at an enhanced rate of 10%
  • Doubling the overdraft facility for the industry and provision of short term interest free or low interest loans for rebuilding businesses.

COVID-19: The Aftermath

The HORECA segment will have to create solutions to revive itself in a world that has become inward-looking and is following social distancing.

  • Health checks: To tackle the fear in the minds of employees and guests, the industry will have to conduct their health check-ups. Ramping up the health screening of guests and employees is necessary and must be diligently followed.
  • Better sanitization: In order to minimize any risk, the industry will have to offer better air quality, better sanitization solutions, food-grade chemical sourcing to sanitize deliveries & takeaways etc. Also, hotels need to issue personal protective gear and eadequate sanitization.
  • Sustainability and Self-sufficiency: Not only should the focus shift to food with higher shelf life to reduce shortages due to lack of supply chain capability; but also, there’s a need to create higher self-sufficiency by owning farms for constant supply of fresh vegetables and fruits or connect to ecosystem players that aggregate farm level stock and data
  • Healthcare specialist: Onboarding a healthcare specialist or partnering with a medical practitioner to offer quality healthcare solutions to guests should be looked at.
  • Space out workstations: Create workstations on either side of processing lines so that food workers are not facing one another

In the times of COVID-19, people will be sceptical of the quality of fresh-food products/ handling of cooked food. Therefore, ensuring food safety and communicating it to the customer would be of paramount importance.

Originally published here .