Globally, Small and Medium Enterprises (SMEs) have emerged as the growth engine of the economy. According to World Bank, the SME sector represent about 90 percent of the businesses and more than 50 percent of employment globally.

In India, SMEs are classified into Micro, Small, and Medium enterprises (MSMEs).

• Micro – Enterprises with investments of up to ₹ 1 crore and turnover of less than ₹ 5 crores are called Micro units.
• Small – Enterprises with investments of up to ₹ 10 crores and turnover of less than ₹ 50 crores are called Small units.
• Medium – Enterprises with investments of up to ₹ 20 crores and turnover of less than ₹ 50 crores are called Medium units.

The MSME sector has become the second largest employer after the agriculture sector. Presently, the MSME sector employs nearly 11.10 crore people and contributes nearly 30% to India’s GDP.

Challenges faced by SMBs

Small and Medium Businesses (SMBs) need to play an important role for India to become a 5 trillion-dollar economy. Despite being seen as the driving force of the Indian economy, they continue to face several challenges.

Many SMBs working in the informal space do not want to upgrade their existing infrastructure due to a lack of expertise. Since they work in the unorganised sector, they face difficulties in availing of credit facilities from financial institutions as they do not possess the necessary documents and collateral, which affects their working capital availability. The lower rate of technology adoption has prevented SMBs from achieving their full potential.

Adoption of Technology by SMBs

The pandemic accelerated the digital transformation of SMBs in an unprecedented manner. The lockdown forced many businesses to go digital. During the post-lockdown period, the country witnessed a higher rate of technology adoption by SMBs. According to a study conducted by CISCO in July ’20, Small and Medium Businesses may add 158 billion USD to 216 billion USD to the GDP by 2024.

In the past few years, many IT firms have launched various products to help SMBs adopt new technology. Many institutions are conducting workshops and training programs to educate SMBs about the latest technology and help them go digital. As per a research study conducted by Google and KPMG, digital-enabled SMBs are expected to grow twice in comparison to offline SMBs.

In the post-pandemic world, SMBs that operated offline have adopted new technology to move online. Small grocery stores have started using software to manage their inventory. They are also offering Unified Payments Interface (UPI), wallets, and QR-code-based payment facilities to their customers.

SMB enablement through Smart Stores

Technology is enabling small stores to become ‘Smart Stores’. E-commerce giant Amazon has launched the ‘Amazon Pay Smart Stores’ program in India to help offline stores become online. It has already transformed more than 17,000 local shops into ‘Smart Stores’ under this program.

The program allows merchants to get a digital storefront. By scanning a QR code, customers can see the available products, check the offers, Value Added Services (VAS) like insurance, and warranty, and read reviews. Smart Store shopkeepers can offer the entire suite of contactless payment options – UPI, net banking, Amazon Pay Balance, credit cards and debit cards, without investing in a separate Point of Sale (PoS) device. Customers can avail EMI option with eligible credit and debit cards. A smart store merchant can also offer reward coupons to customers.

The “Amazon Pay Smart Stores” program is a win-win for customers and merchants as it provides easy credit to customers shopping at offline stores and empowers SMBs to become a part of the formal digital economy. Shops registered under this program experience a 10 to 15 percent growth in sales, with over 10 percent transactions through the digital storefront.

Since its launch in ’20, the program has already onboarded thousands of local shops across the country. In addition, several brands, including OPPO, Lenovo, HP, Xiaomi, Samsung, Prestige, USHA, ASUS, More, Pepe Jeans, CCD, Barista, Miniso, and Puma have already partnered with Amazon Pay.

Way Forward

On August 15, 2022, India celebrated its 75 years of Independence with the government organising several events under the ‘Azadi Ka Amrit Mahotsav’ initiative. This is the right time to build a support system that would help SMBs to achieve their full potential and help India become a 5 trillion-dollar economy.

Disclosure: This is a sponsored post written in association with the brand. All thoughts and opinions expressed herein are the author’s own.