Suresh Prabhu, Retail News, ET Retail

MSMEs don’t have the capacity to deal with something unexpected like Covid-19: Suresh PrabhuStressing the significance of the MSME sector to the economy, India’s Sherpa to the G20, Suresh Prabhu, on Thursday said that while big banks are seen as too big to fail, the small scale industries are too small to survive. Recounting this in the context of the financial crisis of 2008, Prabhu said at that time there was an inherent need felt by the western world to protect their banks.

“Small industries are the most vulnerable ones. This is because of their size, scale of operation, limited financial managerial resources. They are not able to cope with difficulties that are forced on them. It is difficult even in normal times for them to survive, but they don’t have the capacity to deal with something so unexpected,” he said during the virtual launch of “Building Business Back From Crisis of Covid-19”, a knowledge platform to support MSMEs in the post lockdown period by the United Nations Industrial Development Organisation (UNIDO).

Prabhu said the portal could help to hand hold and guide small scale industries, while at the same time also expose them to new realities. Citing the fragmented nature of MSMEs, Prabhu said that offering them visibility should be on foremost agenda and gave the example of large companies acquiring smaller ones due to the level of talent seen in the latter. “All the innovation happens in smaller companies. But while small industries have capabilities, they do not always have the ability to take things to the logical conclusion. India is the third largest ecosystem for startups in the world. They think very differently. However more support is needed for their sustenance,” he added.

He also highlighted the significance of technology inputs and environmental aspects that a small scale industry would need to build up going forward and how this could imply better possibilities of success in the future. “The future world will rely mainly on environmental issues. The new businesses can focus on these areas. Also whatever work other businesses are doing, environmental issues should be mainstreamed in the businesses as well,” Prabhu asserted.

Some of the other panellists at the launch included Vinnie Mehta, Director General, Automotive Component Manufacturers Association of India (ACMA), Vinod Kumar, President, India SME Forum and UNIDO representative Rene Van Berkel.

UNIDO’s portal aims to help MSMEs to Build Back Business from Crisis (B3C) and has a five step plan on the website to enable the road to recovery for the sector. “The knowledge collaboration platform will provide elements and framework for action to help MSMEs think through the many challenges and will also explain that crisis can be an opportunity to improve business,” Berkel said.

The other attendees in the virtual conference also tabled out their concerns about the sector which are impeding recovery or even survival for the sector. Vinod Kumar from India SME forum directed attention to the particularly difficult time being faced at present by the ‘micro’ enterprises. “Of our 86,000 members in the India SME forum, 24,000 members are micro units. Almost 80% of them are going to be in deep trouble and will look at closing down if no funding comes in from the centre or states,” he stated.
MSMEs don’t have the capacity to deal with something unexpected like Covid-19: Suresh Prabhu
Kumar elaborated further on his point by saying that there is an intense need for the banking system to understand that the key to the economy of India is entrepreneurs as well as the MSME entrepreneurs. “Unless we strengthen the MSME sector, it is very little that the economy will have to look forward to,” added Kumar without mincing any words.

Agreeing with his views, Vinnie Mehta of ACMA said that their request to the government has been to allow the entire value chain to open up for their sector and function in unison. “Automotive value chain is very complex but very inter-dependent and widespread. A scrappage policy should be put in place so that new vehicles can come on the road. We also want a reduction of GST by 10% from 28 to 18%. The Government has to step in before it is too late,” Mehta added.



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