The Minister was talking at the ‘India SME Heroes Challenge’ in New Delhi, jointly organized by FICCI and Google India. On the occasion, Muniyappa launched the report, ‘Unleashing the Potential: Internet’s Role in the Performance of India’s Small and Medium Enterprises (SMEs);’ a study compiled and presented by Nathan Associates and released by FICCI, in partnership with Google.
The Minister said that technology was moving at a rapid pace and India needed to keep pace to be able to compete in the world market. There are numerous countries which are far ahead of India in this regard but the country’s direct competition is with China in terms of production and quality, he added.
Amarendra Sinha, Additional Secretary & Development Commissioner, Ministry of Micro, Small and Medium Enterprises, Government of India, said that in his Ministry 60 per cent of the schemes were online and by year-end all schemes will be available.
“We can look at internet from two perspectives. One as a slave, where you decide how you want to make use of it, and the other way is to look at is as a great equalizer, which removes social and geographical barriers. Hence, internet must be used by MSMEs to simplify processes and enrich themselves,” he added.
Dr. Ram Tamara, Managing Director, Nathan Economic Consultant Pvt. Ltd., while presenting the findings of the report stated that SMEs, who use the web, fared much better than those that did not. On an average, web-enabled SMEs boasted of revenues 51 per cent higher, 49 per cent more profit, and customer bases 7 per cent broader than their offline counterparts.
The study revealed significant opportunities both for India’s booming SME sector, where fewer than 5 per cent of all businesses even maintain a web presence, and for India’s economy: small medium enterprises are critical to the economic growth in India, where 47 million SMEs employ about 100 million people and contribute more than 8 per cent of India’s GDP. According to the report, only 51 per cent of online SMBs use the web to advertise a mere 27 per cent use it for e-commerce. But with 95 per cent of businesses yet to even establish a website, India is poised for big gains as more small enterprises come online.
Some of the highlights of the report are:
- The Internet can be a great equalizer for SMEs, providing them with access to new markets, more customers and visibility so as to unleash their potential. The survey of 951 small and medium enterprises in various industrial and geographical clusters across India shows that SMEs that use the Internet, 69 per cent experienced an increase in customers, and 63 per cent an increase in geographic reach and 44 per cent saw an increase in firm employment.
- Controlling for factors such as an SME’s investment in plant and machinery, the age, sex and education of personnel, and ownership type, the study found that using the Internet for business operations increased the SME’s revenue by 51 per cent and profits by 49 per cent.
- On an average, an SME adopting the Internet is able to grow its customer base by 7 per cent and employment growth by 4 percent.
- The perceived benefits of using the Internet are significant: 64 per cent of respondents reported an increase in sales due to Internet use, 65 per cent an increase in profits, 69 per cent an increase in customers, 63 per cent in geographic reach and, 44 per cent in employment.
- While email was used by almost all the Internet using SMEs (95 per cent), only 49 per cent of Internet using SMEs had websites; IT & ITES and hospitality had the highest numbers, and the chemical products and foundry sub sectors had the lowest. SMEs having websites perform better than the ones not having them.
- Doubling of Internet use in SMEs can generate 43 per cent higher profits for SMEs.
- Despite perceived and actual benefits, certain problems and concerns hinder Internet adoption and prevent SMEs that have adopted it from realizing its full potential. Sixty-one per cent of Internet-using SMEs are very concerned about the security of online financial and personal transactions (e.g., hacking of email accounts).
- Only 23 per cent of surveyed SMEs engage in e-commerce; on average they have more revenue, employees, and customers than those that do not.
Rajan Anandan, Vice President & Managing Director of Google India, said, “No developing country with fast growing economy can rely only on its big companies to achieve sustainable growth, and these businesses are leading the way for small Indian business looking to go big online. In the last five years, Internet has had a direct impact on how both consumers and businesses as they engage with each other. India’s huge and diverse base of SMEs can benefit from the Internet and we must work hard to ensure SMEs in India better understand the power of the internet to win in this digital age.”
Sanjay Bhatia, Chairman, FICCI MSME Committee and Chairman and Managing Director, Hindustan Tin Works Limited, said, “The Internet will play a vital role in narrowing the gap between Indian SMEs’ potential and their aspirations. India has all that it takes to compete with other developing and fast growing economies. With the success of e-commerce companies like Makemytrip and Flipkart in India, we believe that more Indian SMEs can benefit from the Internet and e-Commerce. While the government has introduced policies that stress upon the development of SMEs, with this report we would like to highlight how Internet can play an instrumental role in driving growth of the SMEs in the country.”
Google India also teamed up with FICCI to celebrate small enterprises who have already gone online in India, recognizing winners of the first-ever India SME Heroes Challenge, an award that recognizes SMEs who have used the Internet to grow and expand their businesses in innovative ways. An independent jury selected three winners -- Expert Rating Ltd; Crimson Interactive Pvt Ltd and Fabulloso from a list of 10 finalists by a jury consisting of Amarendra Sinha; A K Kapur, Head – International Cooperation, Small Industries Development Bank of India (SIDBI); Michel Botzung, Global Business Lead - SMEs, International Finance Corporation (World Bank Group); Manoj Kumar, Joint Secretary, Ministry of Corporate Affairs and Padmaja Ruparel, President, Indian Angel Network.