2024: A Boon Or a Bane For MSMEs Innovation has become a non-negotiable for MSMEs, especially as they face competition from both domestic giants and global players. India is today the world's fastest growing major economy, and one of the largest drivers of the country's economic progress have been MSMEs, particularly considering their outsized influence on exports and employment generation.

The year 2024 for India's micro, small, and medium enterprises (MSMEs) has been a mixed bag: Navigating through challenges ranging from inflationary pressures to global uncertainties, this sector has showcased perseverance, resilience and adaptability. Constituting approximately 35 per cent of India's total manufacturing output and employing a significant portion of the workforce, MSMEs remain central to the nation's economic growth and social progress.

Chandrakant Patel, chairman and managing director of ICE Make Refrigeration Ltd feels that as a sector contributing 17 per cent to India's GDP, manufacturing saw significant resilience in 2024, driven largely by the innovation and adaptability of MSMEs. Patel summed up this strength saying, "Despite challenges such as inflationary pressures, subdued demand during the Lok Sabha elections, and global uncertainties, the sector has shown remarkable adaptability. By leveraging technology and innovation, it has thrived in a competitive environment, reaffirming its pivotal role in driving India's economic growth."

Patel also acknowledged the role of government policies in bolstering the manufacturing ecosystem, highlighting improved access to credit and incentives for sustainable practices as key enablers for MSMEs.

Technology as a game-changer

In an increasingly competitive global landscape, the adoption of advanced technology has been a cornerstone of MSME growth in 2024. Dassault Systèmes India has been a major player in enabling this transformation. Through its initiatives, such as the 3D experience lab and the startup incubation partner program, the company has empowered MSMEs with tools, mentorship, and networking opportunities.

Ramakrishnan Venkatraman, director, solid works & 3D experience works, DS, explained the impact and stated, "Dassault Systèmes is dedicated to helping Indian MSMEs unlock their full potential. We envision a future where Indian MSMEs can think and operate generatively, driving business growth, social impact, and environmental sustainability. Virtual twin can help MSMEs overcome challenges, accelerate time-to-market, optimize production, and innovate with confidence."

Venkatraman highlighted successful collaborations with companies which leveraged Dassault's 3D experience platform to optimize workflows and accelerate innovation. He also emphasized the importance of the central 3D design tool for MSMEs which enables them to drive innovation while maintaining sustainability.

Innovation

Innovation has become a non-negotiable for MSMEs, especially as they face competition from both domestic giants and global players. India is today the world's fastest growing major economy, and one of the largest drivers of the country's economic progress have been MSMEs, particularly considering their outsized influence on exports and employment generation.

Dr. Kapil Garg, managing director of Asian Energy Services Limited, underlined the importance of this approach. "There is immense scope to use AI applications to enhance productivity across a range of functions or use new energy products to optimize costs or vertically integrate supply chains," he said.

Dr. Garg also advocated for a stronger focus on research and development (R&D). He remarked, "In today's economic environment, MSMEs operate amid not only conglomerates and domestic champions, but also competitors from across the globe. Contrary to widespread notions, we believe India is an excellent place to do research because of the large availability of talent in STEM, something that multinational corporations are capitalizing on more meaningfully than Indian companies, especially MSMEs."

To remain competitive, Garg emphasized the importance of quality, whether in products, services, or execution. His message to MSMEs was clear; those that operate with discipline and strive toward excellence will thrive, regardless of external challenges.

Tailwinds of 2024

The recovery in credit flow to MSMEs has been another critical development in 2024. Dolphy Jose, executive director of South Indian Bank, noted a surge in credit growth, driven by policy initiatives and government support. "Credit growth to MSMEs has recovered from its Covid levels and seen a surge in 2024, driven by a number of initiatives and policy support," Jose stated.

He feels that one of the key drivers was the government's decision to increase lending targets for banks and non-banking financial companies (NBFCs) by INR 1.54 lakh crore during the fiscal year.

"A good monsoon season, robust sowing season and a strong rural demand will be the major tailwinds for MSMEs in 2025", acknowledged Jose.

The road ahead

As 2024 concludes, the MSME sector's achievements provide a strong foundation for the future. Key stakeholders agree that the sector's ability to innovate, adapt, and collaborate will be pivotal in addressing emerging challenges and seizing new opportunities.

Patel's optimism about exceeding revenue targets, Venkatraman's vision for a technology-driven future, Garg's focus on innovation and R&D, and Jose's confidence in financial stability collectively paint a promising picture for 2025.

The year 2024 has shown that MSMEs are not just weathering challenges but also setting benchmarks for growth and sustainability. With continued policy support, strategic investments in technology, and a relentless focus on quality and innovation, the sector is poised to reinforce its role as the backbone of India's economy.

As India aspires to become a global manufacturing and innovation hub, its MSMEs will undoubtedly lead the way, proving once again that resilience and ingenuity are their greatest assets.