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'Resilience need of the hour for MSMEs'
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SME Times News Bureau | 27 Jun, 2020
The Covid-19 pandemic has deeply
impacted the MSME sector and the revival would depend on effectively
tackling vulnerabilities such as financial stress, low demand, dispersed
workforce, and a downbeat export market, according to Dr Ajay Kela,
President, and CEO, Wadhwani Foundation.
The need of the hour is to remain resilient and adaptive in these unpredictable times to survive and thrive.
"Undoubtedly,
the Covid-19 sledgehammer to the MSME sector has been brutal but using
the pandemic to innovate, the sector should now work towards making
sweeping changes in the way it operates," Dr Kela told IANS on the
International MSME Day.
According to a latest survey by the All
India Manufacturers' Organisation, 35 per cent of the MSMEs and 37 per
cent of self-employed individuals have started shutting their shops as
they see no chance of recovery.
Barring few sectors, the next few months are going to be critically challenging for most of the small businesses to survive.
SMEs need to reorganize their priorities and focus as per three stages.
"In
Stage 1, the MSMEs need to focus on Survival and evaluate every avenue
to save cash as it will help in the long run. The second stage of
Stabilization requires them to pivot around new customer needs and
fulfill them through change and innovation," Dr Kela noted.
In
the third stage of Explosion, MSMEs need to use this crisis as an
opportunity, and as the economy recovers, "they should build systems and
processes to scale up with new business models and products".
Facing the brunt of the pandemic, the sector now needs to be agile in response to a changing world.
"It
is important to adopt measures to enhance liquidity in the system with
things like a moratorium on term loans, reduced interest rates, easing
of working capital financing, etc, beyond the credit scheme rolled out;
find alternatives to reverse the disruption of supply chains and access
to markets, thus reviving the business sentiment and lastly, embrace
digital tech to stay afloat and emerge competitively," suggested Dr
Kela.
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