Realignment of MSME Strategies

The spectacular growth of Micro, Small and Medium Enterprises (MSMEs) in Assam has immensely contributed to the state economy. The MSMEs play a crucial role in generating employment opportunities, and therefore, sustainability of enterprises is crucial for addressing the problem of growing unemployment, which is attributed to distress in the agriculture sector. The “Survey of the MSME Sector of Assam with Focus on Sectors with Data Gaps” conducted by the National Council of Applied Economic Research (NCAER) for the Directorate of Economics and Statistics, Government of Assam, presents a comprehensive picture of challenges faced by MSMEs and also identifies the areas which can be unlocked to take the MSME growth on a higher trajectory. While agriculture supports the livelihood of about 75% of the state’s population, low productivity coupled with non-remunerative prices has pushed a large number of farm families away from agricultural activities. While a large section of them migrate to other states, some of them have become part of the MSME workforce. However, lack of skills required by MSMEs among the potential rural workforce from farm families has been a stumbling block in fully tapping its potential. Some of the key findings of the NCAER study help understand the challenges and opportunities that need focused attention in policy making and execution.  One of the key findings of the study is that only 10% of the MSMEs are registered under Udyog Aadhar or Udyam Registration, which hints at “latent potential of formalisation and the need for a streamlined registration process.” Registration helps MSMEs to get easier access to credit, makes them eligible for government subsidies and legal protection against delay in payment by buyers of MSME goods and services, and brings opportunities to exhibit products in fairs and trade exhibitions and get noticed in the markets. The study found that around 87% of the MSMEs in the state have embraced digital transactions, but only micro-enterprises lag in digital integration, and it recommends targeted initiatives to bridge this gap. Digital integration opens the door for digital commerce and helps MSMEs to get onboarded on platforms like Open Network for Digital Commerce to reach out to buyers across the country and reduce their dependency on traditional marketing channels. The traditional marketing channels are ineffective in the expansion of the customer base in a region like the Northeast, where connectivity with the rest of India continues to be a challenge despite significant development. Another important finding of the study is that a gender disparity persists in the MSME sector in the state, with approximately 79% of the workforce being male. The NCAER has rightly recommended that “addressing this gender gap is not just a social imperative but a strategic move to unlock the untapped potential of female talent within the MSME sector.” Aligning this requirement with a skill development programme can help create a pool of skilled women workers who will be ready to be recruited by MSME owners. Traditionally, women belonging to indigenous communities possess skills in weaving and food processing which can be leveraged to boost the productivity of enterprises in these sectors. Some MSMEs already running manufacturing enterprises in the handloom and weaving sector need to adopt product diversification to cater to the requirements of customers outside the state who are attracted by colourful and culturally rich motifs and vibrant colours and also because of the use of natural silk like Eri, Muga and mulberry but want products made from natural yarn and motifs that fulfil their requirements, such as home-style and lifestyle products like cushion covers, curtains, table runners, bedcovers, stoles, handbags, corporate gift items, etc. The Handloom and Textile Department collaborating with the MSME and Skill Development departments and arranging skill training on product diversification can help create a pool of skilled women in the workforce, which will unlock a new window of opportunities for MSMEs in handloom and weaving sectors. Such training programmes being organised closer to clusters of traditional weavers’ villages is essential to ensure enthusiastic participation. The MSME department’s building lists of skilled workers across development blocks, panchayats and local bodies can boost the confidence of the MSME owners to expand and encourage new and potential entrepreneurs to ideate new enterprises that will be sustainable with the available skilled workforce. Growth of MSMEs in the manufacturing sector involving operation of machines depends on availability of trained machine operators. Availability of a pool of trained machine operators in the state is of paramount importance to build confidence in entrepreneurs to procure modern machinery to turn dreams of setting up an MSME unit for food processing. Availability of bank credits and digital integration have boosted the confidence level of MSME owners in the state, and realignment of policy priorities and more emphasis on imparting skills that are high in demand in the MSME sector will ensure robust growth of enterprises. The state is at a critical juncture of realignment of strategies for MSME growth.