Top Challenges And Its Solutions For MSME Financial
Even though the government is trying hard to help them, support them financially, and by providing the best professional who can guide them and assist them in the hard times but some challenges are there on which the government is working but they can be solved manually also if MSMEs try at least for once. 40% of the total export of the country is handled singly by the MSME sector and they contribute a total of 45% for the manufacturing outputs. And India is dependent on MSMEs for the growth and economy. So, it becomes more important to take care of them and do every possible thing for them. With times there has been rapid growth seen but only in this industry. Despite all these things, there are many problems from which they are lacking themselves for the contribution to the economy and growth. A helping hand towards MSME will not help them in the contribution to GDP but will also be able to generate more jobs even in the rural and urban areas. And this will directly affect the liquidity and in their living standards. So, let’s talk about some of the major challenges and what can be done to solve them.
1.ACCESS TO CREDIT
Lack of adequate and timely access to finance is the biggest challenge faced by MSMEs and has stopped their growth. And due to this, they can not buy raw material, manufacture, update their types of equipment, or can not acquire new skills because of a lack of funds. Hence, it resulted in the slowdown and liquidity crunch which led to NPA’s.
RBI and Government have closely observed everything regarding cash flow also and have decided to provide loans for the expansion. The RBI pushed the MSMEs for digitization and have also launched the scheme in order to promote digital payments due to a lack of cash across the country. The Finance Ministers announced at the recent ASSOCHAM anniversary celebrations that restructuring in the MSME sector can be done without categorizing the loans as NPAs.
Technology is the major issue and is lacking MSMEs in terms of production, manufacturing, packaging, and many more. If there is technology then no one is there to guide them or make them learn about it in detail.
IITs, ITIs, Academics, Product Development Centers, Tool Room, and Training Centers and such similar bodies should be encouraged to associate/involve actively with the local MSMEs clusters, understand and appreciate their technology-related problems and issues and try to take those projects under them who are facing major problems and solve them.
Many businesses registered under MSMEs fail in shipping and logistics even if their product, marketing, etc are perfect. And the main concern about these is finding the best and trustworthy company or men for shipping. Even if they have the best one for shipping then also they can not reach on time due to poor roads, and its connectivity, expensive charges, lack of access to the new technologies, and many more.
Scheduled pickups should be there with the executives who will pick and drop the product to the doorstep. The tracking ID should be created for the tracking of the material. And that ID should be mailed directly to the customers.
● SKILL DEVELOPMENT
MSMEs do find labourers at a cheap cost and if not cheap ones but they are easily available and due to this easy availability they are not as skilled as they want to be, to run their business. Skill development is also important but along with that, there are many points which should be considered seriously like work-based learning, including studentship opportunities in MSMEs.
Most of the businesses have already started working on their online presence as they have moved towards digitalization. MSME workers should be hired and should be given all the necessary pieces of training and then only it should be decided who will go where in terms of their skill, knowledge, working capacity, and interest. And if this is also not enough then they should be provided with the EBOOks, Webinars, and other useful videos.
Apart from these, there are issues related to GST, Hand-Holding, Branding, and Packaging, and many more which should be considered and be taken care of. And it’s not that the government is not aware of that, instead, MSMEs are their priority and are working hard to solve them.