Impact Of Covid-19 On Indian SMEs And Strategy To Reboot The Sector

1. Impact Of Covid-19 On Indian SMEs And Strategy To Reboot The Sector

2. The Covid-19 Pandemic Has Severely Affected SMEs On Both The Supply And Demand Sides. Here Are A Few Ways The Sector Can Rise Above The Situation.

3. Challenges From The Supply Side

4. Unavailability Of Workforce Companies Are Facing Labour Shortages Due To The Mass Migration Of Labourers To Their Home Towns.

5. Supply Of Raw Materials Due To Severe Restrictions Of Movements Of Goods And People, The Supply Chain Is Facing Shortage Of Parts And Intermediate Goods.

6. Disruption In Capacity Utilization The Curb On Movements Of Goods And Labour Due To Lockdown Is Likely To Reduce Capacity Utilization.

7. Challenges From The Demand Side

8. Steep Decline In Demand The Lockdown And The Resulting Impact On The Salaries And Rise In Unemployment Have Led To A Decrease In The Demand For Goods.

9. Liquidity Crunch The Drying Up Of Revenue Stream And Decline In Consumer Confidence Can Impact The Raising Of Funds From The Markets And Getting Loans From Financial Institutions.

10. Financial Measures To Stimulate SMEs

11. Collateral-free Loans Rs 3 Lakh Crore Collateral-free Automatic Loans For Businesses, Including MSMEs.

12. Subordinate Debt Rs 20,000 Crore Subordinate Debt For Two Lakh MSMEs Which Are NPA Or Are Stressed.

13. Equity Infusion Rs 50,000 Crore Equity Infusion Through MSME Fund Of Funds, Which Shall Be Operated Through A Mother And A Few Daughter Funds.

14. Raising Investment Limit Revision In Definition Of MSMEs By Raising The Investment Limit And Introducing An Additional Criterion Of Turnover.

15. E-marketing E-market Linkage For MSMEs Will Be Promoted To Act As A Replacement For Trade Fairs And Exhibitions

16. Amendment To GFR General Financial Rules (GFR) Will Be Amended To Disallow Global Tender Inquiries In Procurement Of Goods And Services Of Value Of Less Than Rs 200 Crore.

17. Ways To Reboot SMEs

18. Support Programmes The Programmes Should Broadly Cover Strengthening Of Social Safety Nets, Health Insurance, And Cash Transfer Schemes For The Workforce.

19. Effective Delivery Channels SMEs Can Take Advantage Of The Various Digital Platforms That Will Open Up New Vistas For Generating Revenues And Operational Efficiency.

20. Ease Of Obtaining Finance Post The Pandemic, Small Doses Of Short-term Working Capital Will Be Required. Hence, Smaller Credit Lines At The Right Time Will Have To Be Provided.

21. Training And Skill Development Courses SMEs Will Need To Harness The Benefits Of The Government Of India Initiatives Like Start-up India And Skill India That Promote An Entrepreneurial Culture.

22. Need For Fintech In Semi-urban And Rural Areas It Will Be Essential To Expand The Scale And Reach Of Fintech In Semi-urban And Rural Areas. This Will Ensure The Equitable Allocation Of Resources.

23. SMEs In India Have The Potential To Rapidly Recover From The Temporary Slump And Become Profitable, As Long As Structural And Financial Measures Are Implemented.

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