MSME Inclusion: A Critical Must

MSME Inclusion: A Critical Must

A simple internet search can reveal to us that the MSME sector in India is a key contributor to the country’s economy, providing jobs, driving exports and contributing to economic development. Here are some data points:12

1. Job creation: The MSME sector employs over 110 million people.
2. Helping the nation’s exports: MSMEs account for about 50 per cent of India’s exports.
3. Significant contribution to the GDP: The MSME sector contributes about 30 per cent to India’s GDP.
4. Contribution to the manufacturing sector: MSMEs make up 45 per cent of India’s manufacturing sector.
5. Overall development: MSMEs help develop rural and backward areas.

Accretive growth: The MSME sector has grown significantly, aided by government initiatives and entrepreneurial spirit in India. The MSME sector is growing at a higher rate than GDP growth (approximately 7 per cent). The new automation technologies are inclusive of MSMEs. Otherwise, a large portion of the manufacturing sector and a significant part of the GDP will be deprived of it. Therefore, while top manufacturing companies adapt to these technologies, automation providers must consider MSME needs and requirements.

Automation can significantly improve production processes in the MSME manufacturing sector. It can help manufacturers reduce labour costs, increase productivity and lower the risk of human error by automating repetitive tasks and processes. Automation can also give manufacturers more flexibility in production, allowing them to respond quickly to changing market and consumer demands. A good automation deployment in the Indian MSME industry will help with:

1. Business and revenue growth
2. Enhanced workplace safety
3. Cost optimisation and improved profitability
4. Higher productivity driven by better decision-making
5. Product quality and consistency improvements

to mention a few.

Barriers for MSMEs to adopt a good level of modern automation have been cost-to-benefit considerations, lack of access to the relevant technology and automation products, and poor understanding of the applications of such modern technology in production facilities. Once these barriers are overcome, the adoption rate of modern automation will grow rapidly. Today, the large automation providers focus on the needs of large corporates. It is understandable as the large corporates are the automation vendors’ largest revenue drivers. Adoption of new technologies can bring a pivotal shift in such a disproportionate focus and can prove to be a win-win for both the automation providers and the MSME sector.

As an example, growth in cloud-based pay-as-you-use models can make the latest automation and control technologies available to a large number of manufacturing MSMEs at a relatively lower cost. This is because the combined cost of hardware, software and the operational expenses can now be distributed over a large number of MSMEs and, hence, can be made affordable to them while satisfying the business expectations of automation providers. Imagine a cluster of MSMEs that need a SCADA system for their operations. Individual MSMEs may not be able to afford a sophisticated SCADA system. However, if the SCADA system is hosted on a common cloud that can be accessed by a group of MSMEs, the cost per MSME comes down. Similarly, when such digitisation is deployed at a manufacturing facility, it needs a cybersecurity cover to protect itself from malware and cyber-attacks. Individual MSMEs may not be able to afford independent cybersecurity solutions. However, if hosted in a cloud-based architecture, the same cloud-hosted SCADA can be cyber-secured at a fraction of the cost. This concept can be extended to several automation technologies that can be made affordable and scalable for a cluster of MSMEs. Much work needs to be done to facilitate such systems, and MSMEs should be educated to adapt to them.

With such an approach, the MSME sector can be modernised, made world-class in its manufacturing capabilities and further integrated into the global supply chains to make India a significant manufacturing hub. Therefore, it is mandatory to include MSMEs in this journey to embrace modern automation.

In Conclusion

The journey of automation has come a long way. It is aggressively embracing new and diverse technologies to become even better. Progress in the field of AI is adding several new dimensions to automation and is marching towards autonomous systems. The manufacturing sector is poised to benefit significantly with the help of such automation systems.

As India prepares itself to be in the top three economies on the planet, the manufacturing sector is going to play a vital role in its nation-building ambition. MSMEs, being a large part of this sector, will need to be included in this mission. A globally competitive and differentiated manufacturing competence will need advanced automation adoption by MSMEs and large corporates. The good news is that this offers ample scope for renewed imagination, innovation and creativity for the nation. It needs to be embraced with arms wide open.

With inputs from Ashish Gaikwad, Managing Director, Praj Industries Limited, and former Managing Director, Honeywell Automation India Limited.