The Covid-19 pandemic has deeply impacted the MSME sector and the revival would depend on effectively tackling vulnerabilities such as financial stress, low demand, dispersed workforce, and a downbeat export market, according to Dr Ajay Kela, President, and CEO, Wadhwani Foundation.
The need of the hour is to remain resilient and adaptive in these unpredictable times to survive and thrive.
"Undoubtedly, the Covid-19 sledgehammer to the MSME sector has been brutal but using the pandemic to innovate, the sector should now work towards making sweeping changes in the way it operates," Dr Kela told IANS on the International MSME Day.
According to a latest survey by the All India Manufacturers' Organisation, 35 per cent of the MSMEs and 37 per cent of self-employed individuals have started shutting their shops as they see no chance of recovery.
Barring few sectors, the next few months are going to be critically challenging for most of the small businesses to survive.
SMEs need to reorganize their priorities and focus as per three stages.
"In Stage 1, the MSMEs need to focus on Survival and evaluate every avenue to save cash as it will help in the long run. The second stage of Stabilization requires them to pivot around new customer needs and fulfill them through change and innovation," Dr Kela noted.
In the third stage of Explosion, MSMEs need to use this crisis as an opportunity, and as the economy recovers, "they should build systems and processes to scale up with new business models and products".
Facing the brunt of the pandemic, the sector now needs to be agile in response to a changing world.
"It is important to adopt measures to enhance liquidity in the system with things like a moratorium on term loans, reduced interest rates, easing of working capital financing, etc, beyond the credit scheme rolled out; find alternatives to reverse the disruption of supply chains and access to markets, thus reviving the business sentiment and lastly, embrace digital tech to stay afloat and emerge competitively," suggested Dr Kela.