{"id":7628,"date":"2021-08-16T06:19:02","date_gmt":"2021-08-16T06:19:02","guid":{"rendered":"https:\/\/swaritadvisors.com\/blog\/?p=7628"},"modified":"2021-08-17T08:32:09","modified_gmt":"2021-08-17T08:32:09","slug":"challenges-faced-by-the-msme-in-india","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/blog\/challenges-faced-by-the-msme-in-india\/","title":{"rendered":"Challenges Faced by the MSME in India &#8211; An Overview"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The assistance made by the informal sector to the economy of India is substantial. The fact is that India&#8217;s growth relies considerably on MSMEs that contribute substantially to the GDP by making mass employment in every side of India. In an outlook of its importance, the Government of India is expected to deliver sufficient support to makes sure the growth of MSMEs does not get restricted at any point, especially during the pandemic that has majorly impact the global economies to a standstill. However, despite being so effective, the MSMEs have their issues and challenges that act as obstructions to their growth. Scroll down to check some common challenges faced by the MSME in India.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a54e1544ad69\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a54e1544ad69\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/blog\/challenges-faced-by-the-msme-in-india\/#Role_of_MSME_in_Contributing_to_the_GDP_of_India\" title=\"Role of MSME\nin Contributing to the GDP of India\">Role of MSME\nin Contributing to the GDP of India<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/blog\/challenges-faced-by-the-msme-in-india\/#What_are_the_Ordinary_Challenges_Faced_by_the_MSME\" title=\"What are the Ordinary Challenges Faced by the MSME?\">What are the Ordinary Challenges Faced by the MSME?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/blog\/challenges-faced-by-the-msme-in-india\/#Viewpoint_in_India_to_Encourage_the_Development_of_MSMEs_in_India\" title=\"Viewpoint in\nIndia to Encourage the Development of MSMEs in India\">Viewpoint in\nIndia to Encourage the Development of MSMEs in India<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/blog\/challenges-faced-by-the-msme-in-india\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Role_of_MSME_in_Contributing_to_the_GDP_of_India\"><\/span>Role of MSME\nin Contributing to the GDP of India<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><a href=\"https:\/\/swaritadvisors.com\/msme-registration\" class=\"text-primary\">MSME<\/a><\/strong> is regarded as a significant contributor to the GDP of our nation. It has imparted flexibility to the economic infrastructure by raising the production value and the employment rate to fulfil national and international demands. The MSME sector is dominated by micro-enterprises. Currently, India has approximately 6.33 crore MSMEs, out of which 6.30 crores are working as micro-enterprises.<\/p>\n\n\n\n<p>In\nFinancial Year 2020, the number of registered MSMEs has risen by approximately\n18.5% as compared to the preceding year. However, the growth rate declined from\n40% in the preceding Financial Year, increasing from 15 lakhs MSMEs registered\nin the year 2018. In general, the number of Micro, Small, and Medium\nEnterprises in India in the last five years stood at Rs. 90 lakhs.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_Ordinary_Challenges_Faced_by_the_MSME\"><\/span>What are the Ordinary Challenges Faced by the MSME?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Following are some common challenges faced by the MSME:<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" loading=\"lazy\" width=\"1024\" height=\"310\" src=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/08\/Ordinary-Challenges-Faced-by-the-MSME-1024x310.png\" alt=\"Ordinary Challenges Faced by the MSME\" class=\"wp-image-7659\" srcset=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/08\/Ordinary-Challenges-Faced-by-the-MSME-1024x310.png 1024w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/08\/Ordinary-Challenges-Faced-by-the-MSME-300x91.png 300w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/08\/Ordinary-Challenges-Faced-by-the-MSME-768x233.png 768w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/08\/Ordinary-Challenges-Faced-by-the-MSME.png 1208w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<ol><li><strong><em>Lack of Financial Knowledge<\/em><\/strong>:\nIt is one of the most common challenges faced by the MSME in India. Even as\nentrepreneurs keep making new plans &amp; strategies for the expansion of their\npresent business, there is still an enormous number of entrepreneurs who lack\nthe financial expertise to guide the business in the correct direction. Those who\ndo not have enough financial knowledge may not be able to make vital business\ndecisions concerning MSME loans. In the absence of financial expertise, you may\nfinish by taking incorrect decisions that may harm the business unless you are\nlooking for any external help. Also, finance knowledge is essential because you\nhave to depend on an MSME loan to survive the crisis that may knock at the door\nanytime. Therefore, it is vital to know everything regarding MSME loans,\ndetermine the interest rate of MSME loans and compare the same in the market\nbefore getting a loan.<\/li><li><strong><em>Technology Remains a Major\nPrevention: <\/em><\/strong>Most businesses in India fail to collect\nthe advantages of the advanced technology developments in their sector due to\nthe requirement of awareness and knowledge. Thus, MSMEs need to be informed of\nthe technological advancements that are vital for their business growth. It is\nessential for scientific research bodies to remain involved with the local MSME\nclusters and take notice of their technology-related issues. But, there have\nbeen united efforts to provide solutions to MSMEs in such matters as the\nGovernment is working towards the launch of an e-commerce portal known as\n\u201cBharat Craft\u201d that will act as a direct interface between buyers &amp;\nsellers.<\/li><li><strong><em>Absence of Security in Loan:<\/em><\/strong>\nSome businesses in India may find it hard to get MSME loans as an outcome of a\nsevere collateral or security protocol. Since small entities may not have the\nproperty to validate the criteria to get a loan, business owners may choose for\nunsecured business loans from lenders &amp; not fret over providing security or\nassets to obtain the MSME loan consent.<\/li><li><strong><em>Labour Problems:<\/em><\/strong>\nMost Small, Medium Enterprises (SMEs) face common labour problems and\nespecially in the new normal times, the ongoing migrant crisis has demonstrated\nitself as one of the most complicated areas for industries to run in such times\nof Covid-19 pandemic. Despite labour problems, businesses also need to\nhighlight skill development, training and ensuring market linkages to provide\nboth rural &amp; urban micro-entrepreneurs. The highlighting on skill\ndevelopment can benefit the sector considerably &amp; more so at the crisis\ntime.<\/li><li><strong><em>Lack of Access to Financing\nSolutions:<\/em><\/strong> Most businesses in India face recurrent\nproblems of accessing financing or obtaining an MSME loan even as the\nGovernment has executed measures to make credit for businesses readily\navailable to promote entrepreneurship. The regulatory excuses that cause a\ndelay in getting certifications, licenses, and insurance also hinder the\nforecasts of MSMEs. Most businesses face problems concerning manufacturing,\ntimely purchase of raw materials, or even access to advanced technologies or\nobtain new skills due to the lack of funding. <\/li><li><strong><em>Unavailability of Credit:<\/em><\/strong>\nAnother obstruction that limits the possibility of this sector is its inability\nto get timely credit at a nominal interest rate. According to some experts,\nMSMEs working in PAN India lack the expediency of getting easy credit from\nfinancial institutions. Now, this mitigates their urge for development and\nlong-term growth. The Covid-19 pandemic has impacted MSMEs to a great deal. The\noutburst has left them distributed by eroding their present resources. As an\noutcome, the majority of entities are now out of human resources adequate\nresources. At current, the liquidity crisis is one of the pressing challenges\nfaced by the MSME.<\/li><li><strong><em>Lack of Trust:<\/em><\/strong>\nIt has been observed that banks desist from extending MSME loans since the\namount remains small, and also banks think MSMEs lack the required repayment\ncapacity. In such a condition, they finish up by executing stringent\nregulations on these start-ups. Some businesses in India fail to observe their credit\nrating that obstructs the outlook of getting loans. Further, traditional\nlending options make it hard for business owners to meet criteria besides the extended\nprocedure of MSME loan consent further dampens their spirits.<\/li><\/ol>\n\n\n\n<p>Despite\nthese challenges faced by the MSME, success in business is not indefinable if\nyou are strong-minded, and these issues can be easily solved if you get the\nproper support from the lender.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Viewpoint_in_India_to_Encourage_the_Development_of_MSMEs_in_India\"><\/span>Viewpoint in\nIndia to Encourage the Development of MSMEs in India<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The Government of India needs to take some necessary measures to encourage the development and growth of MSMEs. The Government of India is thinking to create national manufacturing capabilities by leveraging the proposed public projects and procurements. The projects like <strong>Bharatmala<\/strong><sup><a href=\"https:\/\/www.india.gov.in\/spotlight\/bharatmala-pariyojana-stepping-stone-towards-new-india\" class=\"text-primary\"><strong>[1]<\/strong><\/a><\/sup>, Sagarmala are already in effect and intend to connect the rural and urban divide, thereby ensuring the development of the industrial sector. Currently, the economy urgently requires a robust connection between Government industry-academia to track down the evolving necessity in manufacturing to encourage the industrial supply chains in India.<\/p>\n\n\n\n<p>To overcome the above-mentioned challenges faced by the MSME, adopting advanced technology is one of the possible solutions in the future. The Government has taken several steps to make sure the technological development of MSMEs in India on account of the competition level in the global market. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Above mentioned challenges faced by the MSME are practically severe and require prompt resolution. The Government of India is trying to make a roadmap for this sector. Currently, the Government of India has introduced an incentive package of Rs. 3 lakh crores under which MSMEs in India can get collateral-free loans from the proposed banks. But, the proposed schemes suffer from pressing challenges that seek quick resolution from the Indian Government.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/blog\/loan-restructuring-for-msme\/\">RBI Loan Restructuring for MSME up to Rs 50 crores<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The assistance made by the informal sector to the economy of India is substantial. The fact is that India&#8217;s growth relies considerably on MSMEs that contribute substantially to the GDP by making mass employment in every side of India. In an outlook of its importance, the Government of India is expected to deliver sufficient support [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":7629,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[34],"tags":[809],"acf":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/7628"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/comments?post=7628"}],"version-history":[{"count":6,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/7628\/revisions"}],"predecessor-version":[{"id":7660,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/7628\/revisions\/7660"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media\/7629"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media?parent=7628"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/categories?post=7628"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/tags?post=7628"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}