One of the best managers I have ever worked with, a man who is credited with creating a powerhouse financial services firm from virtually nothing was very fond of a particular quote- “Small strokes fell great oaks”. Big outcomes do not necessarily come from seemingly big actions. More often than not they are a result of repeatedly doing small things right. And these words are true for the digital future of our small businesses too.
Due to the recent COVID-19 lockdown my mother-in-law, has been stuck in Pune (where I live) for the past few months. Not knowing local shopkeepers and chemists, she found a nearby pharmacy on Google for her monthly supply of medicines and since then gets them delivered by the store on time every single month. Since the supply was regular and there were no complaints, I never gave the arrangement a second thought, till yesterday when I saw that the pharmacy, she ordered from is nearly 6 km away from our home! I was surprised that the search skipped 20 other pharmacies enroute! How did this happen and was it a one off? I made some enquiries with other people and found that this particular pharmacy makes at least 2 deliveries to our housing society every day. With an average order value of Rs 3000 per delivery, the pharmacy is earning at least Rs.2 lakh per month from one housing society alone. Astonishingly, he doesn’t play the price game either to woo his customers! Then what accounts for his popularity? Here are the reasons –
1. Understand search marketing & how you rank on it: Most small business owners do not understand search marketing. Their view is that being listed on Google with their phone number alone should suffice. It doesn’t work that way. You have to make sure that your listing is 100% (working phone numbers, photos of your store, correct location etc). Most business owners do this listing as a one-time exercise and don’t update.
2. Have a social media presence for your business. What’s seen is what’s sold: You might think having a small website, Facebook page or a twitter account is a fad, but your customer is present on these platforms and so should you. It helps your customers remain in touch, establish credibility for your business and also helps you build more authority. Put simply the more you are present online, the more you’re searched & talked about by your customers, the better your chances of discovery on a Google search wrt. your competition.
3. Invest in a CRM system. Don’t ask the customer the same question twice: Who is your customer, what does she order and what is her desired frequency of delivery. It will help you not only be in constant touch but also cut down the cost of doing business. It does not take much to update your simple excel worksheet and set reminders on the same. There are shopkeepers who do this on nothing more than pen and paper. While the age-old system works, your customer’s behaviour is changing towards expecting flawless service at the click of a button, your business should adapt quickly to the change.
4. Customer Testimonials are important. Actively seek them out: In today’s world nothing gives more legitimacy to your business than customer testimonials and ratings. This is something that you need to be actively promoting. Make it your goal to get a couple of good testimonials per week. Conversely be very aware of negative comments on your business. Do everything you can to make sure that the customer complaint/feedback is not only addressed but also seen to be addressed. Your reputation is very important. Enhance it and guard it with all you have.
5. Create interesting content: No matter how boring you think your business is, there are always things that customers don’t know about your product and which if told to them, is likely to be appreciated. Put that content out, gather feedback and improve. I still recall how a juice seller showed me how to peel a pomegranate and pick the right watermelon. It’s been 12 years since then and I still remember him fondly. Make your trade knowledge more accessible to your customers and they will appreciate it. Repeat the process and over time you will have a repository which will put you far ahead of your competition.
UPI 2.0 has the potential to accelerate and drive change at a much faster rate. The challenge that NPCI has taken to expand the service beyond smart phone users to the 500 million-strong feature phone users in India, will help new avenues openup for industries like E-commerce, Travel & Hospitality, Health-care and in particular the Micro-merchant& Retailer segments across the country.
India’s focused on-ground implementation of the Aadhaar program paired with Jan Dhan Yojana is a massive asset which has doubled India’s banked population to 80% by 2017, starting from 2011. Bolstering this powerful mix is theUnified Payments Interface (UPI) introduced byNational Payments Corporation of India (NPCI)in 2016, which allowsfor full-scale interoperability and instant real-time transfer of funds through a mobile number associated with a bank account.
With the COVID-19 pandemic posing unprecedented challenges to micro & small businesses, digitization of payments systems, especially availability of UPI,is proving critical in facilitating immediate access of contactless funds to rural and urban customers alike and helping them buy essentials from merchants. The month of May 2020 alone saw a billion plus UPI transactions and millions of person-to-merchant (P2M) transactions as customers’ inclination to use QR-code based payments rather than cash and cards at retail outletsincreased manifold. This rapidly evolving trend negates the need for erstwhile point-of-sale machines and allows for massive savings in physical distribution, servicing and collection efforts that were previously undertaken by banks.
UPI has proven its worth and benefits. Given the current situation, it is now time to evolve to the next level in this journey and welcome UPI 2.0.
UPI 2.0 has the potential to accelerate and drive change at a much faster rate. The challenge that NPCI has taken to expand the service beyond smart phone users to the 500 million-strong feature phone users in India, will help new avenues openup for industries like E-commerce, Travel & Hospitality, Health-care and in particular the Micro-merchant& Retailer segments across the country.
In 2019, the Central Board of Direct Taxes (CBDT) issued a notification which ordered companies with a turnover of more than ₹50 crore to include the Unified Payments Interface (UPI) and RuPay debit cards as payment methods. It was a firm step ahead in bolstering digital payments in India.A lacuna in the guidelines, however, was evident in the unavailability of a recurring payments option.The upgraded version of UPI resolves this by allowing for a one-time mandate with block functionality wherein customers can pre-authorize a transaction and paylater on a pre-decided date which could be harnessed by e-commerce players both for B2B and B2C transactions for payment on successful delivery.
Individual users and small merchants will benefit tremendously from these features, as mandates are generated instantly, and payments get deducted automatically on the authorized date creating a ‘pay-later’ feature of sorts for the customer.
So far, users were able to link their savings and current accounts to UPI. UPI 2.0 allows users to access their overdraft accounts, offering need-based, short-term credit facilities with the transaction limit also now doubled to INR 2 lakh.To reduce the physical collection efforts of the BFSI industry, UPI 2.0 can add a significant push to the digital collection of small-ticket loans by running cyclical processes for collection request generation. Auto-generated EMI statements with collection requests can be sent for customers’ verification, post which the customer can authorize the transaction for instant EMI repayment.
Interestingly, the new UPI 2.0 also features additional security for customers. The upgraded construct allows for the dispatch of online invoice to the customer from the merchant, hence transferring the power of ‘verification of order & amount’ to the customer before paying the merchant. Also, to improve authenticity of transactions and merchants registered with the UPI ecosystem, customers can check the authenticity of merchants while scanning the merchant’s QR code, limiting the possibility of fraudulent transactions.Digital invoicing at micro-level will also allow for aggregation and analysis of data at merchant level and provide invoice financing solutions.
With the COVID-19 ‘new normal’ here to stay and innovative solutions like UPI set to be launched on feature phones, India will move closer to its 100% financial inclusion dream and accelerate the growth of thousands of micro-entrepreneurs across the country.
There is evident need to fast-track the adoption of UPI 2.0. As of now, UPI 2.0’s certification is still underway, and PSPs are yet to implement it. Considering the fast-paced nature of technology development and the importance of a robust & novel payment system like UPI especially for micro and small merchants, the government must facilitate a faster rollout of technical specifications with stakeholders like NPCI, PSPs and banks and accelerate the implementation, reach and adoption of UPI 2.0.
Article first published on: https://bfsi.economictimes.indiatimes.com/blog/time-to-go-beyond-upi-and-help-digital-transactions-grow-with-upi-2-0/4388
The Micro, Small and Medium Enterprises (MSMEs) sector has traditionally been the backbone of our economy. However, over the past few years, the MSME sector has started confronting some challenges, including country’s shift to GST tax regime, lack of technological knowhow, inefficiencies in supply chain and difficulties in availability of funds.
Since businesses aided by technologies deliver better products and services, and save time and money, technological advancements play a critical role in shaping businesses.
This brought to light the need for MSMEs to adopt digital technology enabled platforms as a solution to challenges being faced by these firms. To support this, the government has launched the Digital MSME scheme in 2017, that involved providing training to MSMEs and enable them to overcome the hurdles in digital transformation.
Digital Transformation is a new force that has fundamentally changed how MSMEs operate and deliver value to customers. It has led to smart integration of digital technologies, processes and competencies across all levels and functions.
MSMEs must embrace digital tech to stay afloat
The micro, small and medium enterprises (MSMEs), which have borne the brunt of the COVID-19 pandemic should embrace digital technologies to stay in business and emerge competitive in the post-COVID world.
MSMEs must transform the way they function to be able to continue to produce goods and services during this turbulent time. This can be done by adopting technologies which will not only allow MSMEs to reduce onsite labours but also help them to control their process digitally.
That’s because digital transformation makes businesses more transparent and efficient. It provides opportunities to enhance the customer satisfaction and build great working environment. Resultant, MSMEs can accelerate growth, optimise operations, and create value across organisation. Also, it helps small businesses embrace new technologies to improve their manufacturing process and improve ROIs.
Digital trends in the COVID scenario
Customers are willing to shop online for categories like accessories, appliances, apparel and footwear, OTC medicines, snacks, electronics, groceries, etc. Approx. 14% consumers across these categories switched across brands for the convenience of online shopping, with a 50% intent to continue.
This highlights the importance of bringing your small business online, and taking your offerings to customers who are getting accustomed to shopping online.
In addition to this, there is a rise in adoption of digital sales channels, which implies that digital interactions will hold greater importance instead of traditional interactions in the post COVID world.
According to a survey conducted by an IT company Endurance International Group (EIG), about 30% of MSMEs started a business website or enabled e-commerce functionality since the lockdown started owing to the COVID-19 pandemic. More than 50% of MSMEs started using video conferencing tools and WhatsApp to keep business running.
MSMEs are going Digital with India’s trusted B2B platform. Know more.
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.
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.
Make sure that you staff washes their hands at regular intervals, wears gloves and masks, especially if they are facing customers.
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.
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.
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.
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.
The Standard Chartered powered SOLV MSME Credit Card empowers owners of micro, small & medium businesses with short-term working capital, helping them manage the impact of COVID-19 led slowdown
Bengaluru, June 26th, 2020: On the occasion of International MSME Day, SOLV, a B2B digital platform for Micro, Small and Medium Enterprises (MSMEs), announced the launch of a credit card tailor-made for the MSME segment, in partnership with Standard Chartered Bank, India. The SOLV MSME Credit Card provides business owners with a ready means to meet ongoing business expenses including supplier payments, fuel, logistics, purchase of raw material, utility payments and others working capital outlays, in addition to also leveraging multiple benefits of the SOLV platform that helps small businesses trade goods with each other and expand their customer base across India.
Amidst the COVID-19 slow-down led cashflow issues that MSMEs are facing, SOLV MSME Credit Card is unique in its timing and host of customisation that allows for short-term revolving credit availability for small businesses and is supported by a leading multinational Bank in India.
The SOLV MSME Credit Card doesn’t charge any joining fee to the MSME, and is packed with cashback and reward features tailored for the MSME sector. With this one-of-a-kind credit card, MSMEs can also offset losses due to fuel price hikes by enjoying a 5% cashback on fuel transactions; effectively making more than two litres of petrol free for them on a fuel spend of Rs. 4000 every month. Additionally, micro & small businesses can strengthen their digital credibility, which is fast becoming a must-have for success in the current business environment.
Commenting on this partnership, Jinesh Shah, MD & Head, Alliances, Partnerships and Mortgages, India, Standard Chartered Bank said, “The Bank firmly believes that MSMEs are the growth engine of the country and will propel India‘s next wave of development. We are committed, along with SOLV, to help the MSME sector realise its full potential. SOLV’s mission to enable MSMEs digitally and find innovative solutions for their challenges progresses further with the introduction of this affiliate credit card and we are happy to partner with them in this important initiative.”
Speaking about the SOLV MSME Credit Card, Nitin Mittal, CEO, SOLV said, “The SOLV MSME Credit Card is another step in our continuous endeavour to help MSMEs overcome their growth challenges. This credit card will help small business owners tide over immediate crises such as paying for daily expenses and logistics costs with ready access to funds from a reputed, reliable partner at an affordable rate. In the long run, it will empower them to do much more with their businesses by giving them the freedom that comes with having enough liquidity at one’s disposal.”
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:
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.
There are 42.50 million, registered & unregistered MSMEs in India, this accounts for a staggering 95% of the total industrial units in the country.
MSMEs in India employ about 106 million people, that is, 40% of India’s workforce – second to the agricultural sector.
Indian MSMEs produce more than 6000 products.
They currently contribute around 6.11% of the manufacturing GDP and 24.63% of the service sector GDP.
MSMEs produce 45% of the total Indian manufacturing output.
MSME exports are approximately 40% of total Indian exports.
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. (https://www.solvezy.com/indias-rs-20-lakh-crore-covid-19-economic-stimulus-package-impact-on-msme-sector/).
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. (https://www.solvezy.com/micro-small-medium-enterprises-msmes-covid-19/).
> 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:
Stabilise one’s core offering and explore new adjacent areas to venture into
Leverage local subsidies, revisit the supply chain, and focus on cash management
Analyse ways to change the value proposition, delivery channels and target new customer segments
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।
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.
Proper implementation of the stimulus measures for the sector, minus the red tape, is crucial.
The Atmanirbhar stimulus package is a welcome mix of fiscal and monetary support, ease of conducting business processes, as well as some fundamental reforms. However, the stimulus measures do not address current economic needs and will not have an immediate impact.
Introducing clarity in policy communication by making it simple for the end beneficiary, ie the MSMEs, without leaving any room for subjectivity, 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 ₹200 crore, but has bestowed power to the respective departments in ‘exceptional case’ scenarios to consider global tender enquiry.
While 30 per cent of the overall buying demand comes from the government and allied agencies, due to policies being left to individual inference, Indian MSMEs find it hard to supply despite the ‘preference to make in India’ (PMI) guidelines calling for a 100 per cent domestic purchase for certain specified products.
One could argue that the lack of scale that Indian MSMEs have compared to global MSMEs begs for an alternate lending lens to be applied for providing growth capital to MSMEs. This has been amply supported by the Centre through the ‘Fund of Funds’ initiative, but it also has left a major chunk of debt financing to current traditional underwriting measures of the market.
A substantial amount of liquidity has been infused into the banking system in the hope that it will in turn lend more profusely to industries, especially MSMEs. The loan guarantee scheme is another such measure expected to act as a catalyst for lending to this sector, but its success will depend on clear guidelines on implementation to banks and NBFCs, and communication on the steps to leverage this stimulus package for the MSME segment. Banks may turn into growth consultants for MSMEs in the process.
On the demand side, with the latest sustenance boost announced on the heels of the government’s second stimulus package, the Reserve Bank of India (RBI) has provided further relief to borrowers with a three-month loan moratorium extension on top of the three months announced earlier. The repo rate cut of 40 bps is likely to improve credit appetite in the retail segment and help kick-start the economy.
The relief measures this time also included exporters and importers, with the provison of a ₹15,000-crore credit line to EXIM bank, extension of export credit sanctions by three months and a six-month extension for completion of outward remittances for importers. This will go a long way to ease liquidity in the MSME sector, which contributes to 40 per cent of India’s exports.
In this scenario, what MSMEs are asking for can broadly be bucketed as below:
The immediate availability of subsidies, with simplified processes for getting them without hindrance.
Over 95 per cent of our MSMEs are not in the formal finance fold currently; an urgent review of alternate lending mechanisms and credit scoring criteria needs to be undertaken by the Centre to unlock liquidity in the system
Clearance of all due payments stuck with the government and large corporates on priority.
Full restoration of mobility with rules defined and strict adherence monitored, as it is critical to running a business.
For stressed lenders, the challenge of any government-sponsored scheme lies in its last-mile implementation. Delays or denials because of red-tape will make financial institutions wary of any government credit enhancement schemes, and render all the good work done thus far ineffective.
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.
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