Leveraging technology to maximise the potential of women-led MSMEs in India
MSMEs have benefited considerably from digitisation. Technology has greatly aided many women-led MSMEs particular in rural areas
Sandip Chhetri March 14, 2023
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Micro, Small and Medium Enterprises (MSMEs) have greatly contributed to our economy’s development and are still continuing to do so. For decades, women’s contributions to the Indian economy have been hampered as part of the work done by women, such as farming and household duties, has been regarded as everyday chores. MSMEs have greatly aided many women in achieving financial independence and a sense of success, particularly in rural areas of the country. Micro-entrepreneurship has facilitated women’s economic empowerment in a variety of areas, including socioeconomic opportunity, property rights, political representation, social equality, family development, community development, and ultimately national progress.
The impact of technology on the growth of MSMEs in India
MSMEs have benefited considerably from digitisation, including a broader client base, lower staff costs, and production efficiency during a downturn in the economy, and ease of enabling transactions between buyers and sellers, among other things. It will continue to be crucial as businesses try to accelerate their digital transformation efforts in order to meet the demands of their increasingly tech-savvy clientele. Leveraging technology to protect financial records will make applying for loans and exploring investments quicker and more profitable. Also, the development of neobanks and e-payment systems has been essential for the expansion of MSME financing in India. These platforms have made it simpler for companies to digitise their financial transactions and accept payments from clients and suppliers.
Moreover, small businesses can benefit greatly from digital technologies that can enhance the client experience. Small businesses can benefit greatly from digital technologies that can enhance the client experience thanks to technology. Using cutting-edge technologies, such as artificial intelligence (AI), machine learning (ML), augmented reality (AR), the internet of things (IoT), big data analytics, etc., can provide small businesses an advantage and enable them to grow and compete with corporate giants.
The challenges faced by women-led MSMEs in India
The poor representation of women in the industry serves as a reminder that the ecosystem as a whole still faces multiple challenges that make it difficult for women to participate. In India, there are over 60 million MSMEs registered, but only 20 per cent of them are held by women, according to the Annual MSME Report of 2020–21. There is a catch in this that suggests women-led firms may be even fewer among these women-owned businesses. Together, women-owned MSMEs in India contribute 3.09% to industrial output and employ 10% of all workers involved in various economic activities.
According to a study conducted by the International Monetary Fund (IMF) and Goldman Sachs, the difference between men’s and women’s labour force participation has a significant effect on a nation’s economic growth. According to a McKinsey Global Institute analysis, India’s GDP may increase by $700 billion by 2025 if the gender gap in the workforce, which includes formal, self-employed, and informal employment, is closed.
Funding is the lifeblood of any business, whether it is a start-up or a large corporation. Nonetheless, most women entrepreneurs find it extremely difficult to secure financing for their business ventures. Despite having better credit profiles, there is natural gender mistrust in the case of female business owners. This has been confirmed by multiple studies that show the rejection rate of loan applications from women entrepreneurs is higher in undeveloped and developing nations.
In addition, women entrepreneurs find it challenging to break into the market because they lack access to key contacts, industry knowledge, and the procedures and processes necessary to run their businesses successfully and efficiently. Starting a business necessitates education—and occasionally unlearning—domain expertise, upskilling, and network and financial access. The absence of a productive environment may be detrimental to women entrepreneurs. It limits educational opportunities and restricts access to mentors and resources.
Efforts by the government to help women entrepreneurs break through the glass ceiling
A comprehensive package of policy initiatives has been made in the Union Budget 2023–2024 to revive the country’s MSMEs. The Finance Minister, Nirmala Sitaraman, has submitted a carefully balanced budget that emphasises capital expenditures (CapEx) as the development engine while also giving fiscal consolidation sufficient attention. The dedication to strengthening the business ecosystem in the nation is reflected in the growing investment in the MSME sector. Moreover, the country’s MSME ecosystem is being shaped by digital technology, and the government intends to make sizable investments to speed up technology adoption.
The Women Entrepreneurship Platform is a project launched by the Indian government’s NITI Aayog, which brings together female entrepreneurs and sponsors who are eager to support them in one place. For businesses in the beginning phases, there is a programme of incubation and acceleration, help with marketing, support for assuring compliance with laws and regulations, funds and financial support, mentorship programmes to learn about business and leadership, and a tremendous group and network of women with similar interests.
The Prime Minister’s Employment Generation Program (PMEGP), Stand-Up India, the Mahila UDYAM Nidhi Scheme, the Udyogini Scheme, the SIDBI Made in India Loan for Entrepreneurs (SMILE), and Rural Self-employment Training Institutes (RSETI) are only a few programmes to assist ambitious female business owners in taking the first step towards financial emancipation.
The winds of change
As the startup environment in India continues to evolve, more and more women are pursuing the entrepreneurial dream and succeeding in their ventures. Yashodhara Bajoria had observed inaccurate and often empty books of accounts from MSMEs. That is when she created CAXpert, which offers small and medium businesses easy, practical, and affordable accounting solutions. Entrepreneur Pritha Datta Chowdhury launched Econolytics, a network of data scientists and engineers, after seeing the value of data-driven innovations. Pritha observed that while most MSMEs were familiar with buzzwords like AI, big data, and machine learning, they were unable to understand how those elements benefited their businesses.
For these MSMEs, Pritha proposed Econolytics, a curated marketplace of data scientists and engineers accessible on-demand, and flexible-duration hire for businesses. 24-year-old Shristi Banka founded Banka & Banka CFO Services, which assists SMEs with corporate and statutory compliance, including direct taxes, GST, indirect taxes, regular filings on MCA (Ministry of Corporate Affairs), corporate governance, etc. These are just a handful of the long list of women entrepreneurs in the country who exhibit the benefits of their creativity and innovation.
We live in a nation with a wealth of talent and untapped entrepreneurial potential that can help small and medium-sized businesses expand. The potential of women entrepreneurs in the MSME sector must be recognised because entrepreneurship is a major force behind innovation, economic growth, and job creation. The continuous nurturing of this sector, along with measures to embrace new technologies and favourable government policies, will be crucial to promoting the MSME sector and positioning them on the world map.