SMEs are a major contributing factor to India’s economy. An estimated 9.2 million SMEs are currently registered under the country’s GST. As per the study by the Bengaluru-based digital payments and services startup, Instamojo, about 47 per cent of these SMEs have already adopted digital tools for business processes, payments, and online sales in India. The remainder could be a potential market for advanced offerings from the fintech industry.
According to Instamojo’s survey, approximately 49 per cent of SMEs still prefer traditional lending channels over digital. However, a huge majority of 75 per cent of respondents believe that technology helps to solve many of the challenges faced by small companies.
“They leverage online information, logistics and email apps, social media, task management solutions and also train employees on technology. A dearth of skilled labour, time spent solving the challenges and a lack of understanding of how technology might help, keeps the rest from trying,” the report said.
Further confirmation of the popularity of digital payment technology can be seen by in the high level of SME user satisfaction. The report states that: “Nearly three-fourths of the respondents reported to be ‘very satisfied’ or ‘extremely satisfied’ with their experience of digital payment products,” it noted.
“The MSME sector makes up for a large chunk of the Indian economy, employing more than 117 million people and contributing to making India a US$5 trillion economy. However, the sector still faces several roadblocks like the lack of tech knowledge or the absence of skilled workforce,” said Sampad Swain, Co-Founder & CEO, Instamojo.
The report also made note to give credit to the government’s MUDRA scheme; saying that it has allowed startups and small businesses to access capital ranging from Rs50,000 to Rs 1 million.
On the other hand, the report observed that SMEs have also been bogged down to some extent by critical challenges that has stifled growth. Despite this, the adoption of tech is the beginning of a paradigm shift. One that aims to help SMEs grow faster and larger through digital innovations.