‘49% Indian MSMEs prefer traditional lending channels’

ST CORRESPONDENT
Thursday, 21 November 2019

The MSME sector’s contribution to the country’s GDP currently lies at 29%, given an overall population of 63.4 million MSMEs spread across the country.

PUNE: As per a  report by Instamojo, an online platform for Micro, Small and Medium Enterprises(MSMEs) to start, manage and grow their business online, about 49%  MSMEs prefer traditional sources of lending to online peer-to-peer platforms. 

The report ‘Indian MSME Impact Report 2019’ was launched on Wednesday after a detailed six-month analysis on the MSME sector. It highlights four areas of concerns: Defining an MSME-preneur, challenges faced, value perception of Fin-tech and business transformation.

The MSME sector’s contribution to the country’s GDP currently lies at 29%, given an overall population of 63.4 million MSMEs spread across the country. While the government defines an MSME based only on their annual turnover, this report, however, defines the persona of an MSME basis primary parameters such as ‘Goods vs Services classification’, meta categorisation of business categories, type of infrastructure invested in, and nature of activity within the industry chain.

The report highlights that although 75% MSMEs believe that technology helps solve major challenges pertaining to operations, the other 25% attribute this to factors such as unavailability of skilled labour and lack of understanding of technology. After the implementation of GST, 9.2 million MSMEs registered under GST which is an increase of 50% over the previous tax regime. There is high probability that MSMEs will adopt business analytics tools given that 47% of them have adopted digital tools for business processes, payments, and online sales in India. 

“The MSME sector makes up for a large chunk of the Indian economy, employing more than 117 million people and contributing to making India a $5 trillion economy.  However, the sector still faces several roadblocks like lack of technology knowledge or absence of skilled workforce. We at Instamojo have always worked towards empowering Indian MSMEs through various digital solutions, addressing the gaps in their growth story. Through our report, we envision to be the voice of the MSMEs by bringing to the forefront facts that will open further channels toward development,” said Sampad Swain, Co-Founder and CEO, Instamojo.

The findings also suggest that 35% of MSMEs shifted to digital payments, given the ease of transaction, 9% for availability of data synchronization and privacy features, and 11% due to customer preference.

Instamojo provides a host of services ranging from digital payments, logistics to lending. The survey captured customer perceptions of the performance of Instamojo’s products with payment links ranking as most used product, followed by the payment gateway and their online store. As part of their upcoming plans, Instamojo aims to introduce promotional services, helping the MSME sector stay relevant in a competitive digital business landscape.

The report highlights four areas of concerns: Defining an MSME-preneur, challenges faced, value perception of Fin-tech and business transformation.

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