Entrepreneurial challenges & Solutions for the MSME sectors in India: Post Covid-19 World
After the havoc demolishment in the economic front due to the covid-19 pandemic and the resulting lockdown, the MSME sectors in India are trying to revive their strength once again. But there are multiple challenges before India’s MSME sectors in the post-covid-19 world. Even before the strike of the pandemic the MSME sector was not delivering stunning results on the economic front. Most of the MSME organizations were financially sick, and some of the registered MSMEs that are already incorporated through company registration was facing multiple challenges. It’s important to take a glance at the threats & challenges posed by the post-covid-19 world on our MSME’s sector:
- Burden of annual statutory compliances for the organizations: MSME sectors that are already incorporated through company registration for different kinds of organizations, facing the hard challenges of annual compliance. Pvt Ltd companies, LLP’s and OPC’s the companies that also belong to the MSME sectors have to comply with the annual compliance for Pvt Ltd Company, annual compliance for LLP & annual compliance for OPC as per MCA rules. Compliance burden to these small companies is putting extra burden & cost to their statutory formalities.
- Inadequate financial support from the bank: Even after the Atmanirbhar Bharat package announcement from the government of India, companies belonging to the MSME sector are facing hurdles to get the proper financial assistance. Without proper verification & authentication, even the banks are not encouraging the MSME’s loan & credit applications. As the lockdown has just ended, instead of focusing on their businesses, MSMEs have to go through with these anxieties & added pressure.
- Skyrocketing Metal & Cement price: Since the beginning of unlocking, the cost of steel and cement are almost touching the roof. MSME sector engaged in small engineering, repairing, and hardware activities, are literally losing their breath to procure the raw materials for their business operations.
- Rising Fuel & Petroleum price affecting logistics: The price of petroleum is an all-time high, as the petroleum companies hiked their price continuously in the last couple of months. MSME companies are incurring heavy losses at the time of transporting their finished products..
- Loss in productivity & workforce: The problem of power cuts still persists, and adding more pain to it, the migrant crisis severely damages the workforce planning for the small MSME organizations. Rescheduling the routine of the small workforces is reducing the productivity of the firm severely.
- Competition from the big companies are getting bigger: As the current economic situation is unfolding, the foreign investments and new business set up is likely going to increase in the post covid world. The competition before the existing MSME companies will likely to increase.
Though the government of India has already announced several packages and financial incentives for the MSME sector under the scheme called ‘Atmanirbhar Bharat’, MSME sectors in India need some more attention and focus for their survival. Let’s check out one by one:
- Lesser compliance burden for the MSME sector: The government of India should announce some relaxations and special exemptions for the MSME sectors. If the annual compliance for Pvt Ltd company, annual compliance for LLP’s an annual compliance for OPC’s will be less burdensome, the MSME sectors can be less stressed & anxious about their statutory obligations.
- Special subsidy for raw materials: The government may provide categorical subsidies for different metals, steel, and cement essential for the MSME sectors. This might help this sector to cope with the price changes.
- Speeding up the financial assistance process: The government may also direct the banks & financial institutions to expedite the process of loan disbursement to the MSME sector.
- Technical guidance and training for the MSME’s: The way of doing business is changing very rapidly in India. UPI’s, net banking, virtual offices are making their places at the commercial transactions & business setting up. The concerned authorities should arrange a special training program for the entrepreneurs of MSME sectors, in order to enlighten them about the latest processes and technologies.
- Improved product quality & price to beat the competition: The MSME sector must also think about the improvement in the product quality & working process to outnumber the external threats.
MSME sector can still thrive in the post-covid-19 world if it can survive the current financial terrene which is creating a constant existential threat for this sector. But the future of the MSME sector is still bright and prosperous if the course of its direction can be rectified.