The MSMEs in India contribute to the major part of the country’s GDP growth. It constitutes nearly 40 percent of the total GDP. Being the largest contributor to the GST with 56 million MSME entrepreneurs, it shows an increasing trend of Indian entrepreneurs having the ability to innovate and build new products that address the unique needs of India.
The Digital Transformation phase which was once adopted by the large sectors and giant industry players is no more a distant dream for the MSMEs. There is plenty of software outsourcing and Saas products (Software as a service) available to help MSMEs in managing the business. These products are user friendly and can be easily customized according to the needs of small businesses and entrepreneurs. The services can include ERP, employee salary accounting, taxation, financial management, etc. Usage of technology can enhance MSME’s efficiency, reduce cost, and expand market reach, at domestic and international level.
Digitization makes it flexible to manage business easily and is also determined to solve many major problems faced by small business owners. For example, earlier it was difficult for the MSMEs to access cheap credit, but digitization has made it easier, as RBI (Reserve Bank of India) has introduced V–CIP (video customer identification process) to perform KYC and onboard new customers.
With so many potential advantages through digitization, the MSMEs should also align themselves with digital transformation like enhancing their trust score and making them creditworthy.
The MSMEs should also be ready to build good behavior to become creditworthy as lenders use various data points and information to assess the creditworthiness. This not only includes paying loans or EMIs back on time but also requires several other measures like GST taxation, EPFO fillings, and responding to legal cases more swiftly.
The GST Fillings, EPFO payments, and MCA filings are available for tracking in the public domain. Lenders can evaluate these online on a monthly basis. So, it is necessary to make sure the things are done at the right time and periodically reviewed.
The MSMEs must be future-ready by keeping pace with the new technologies for delivering high-quality products and building creditworthiness to help in the long run.
