SMEs seek support from government to embrace digitisation and sustainability practices: FICCI Report
28 October 2023: FICCI Report on SMEs in India is based on a nationwide survey of more than 600 SMEs across 14 cities followed by focussed group discussions. The report highlights how SMEs are adapting to the digital transformation taking place and adopting sustainability practices; it identifies the challenges in this regard and makes specific recommendations on how to overcome them.
Digitalisation of SMEs in India
Digitalisation has gained traction. SMEs in India have been increasingly adopting technology and digital solutions to enhance their competitiveness. This includes the use of e-commerce platforms, digital marketing, cloud computing, and automation tools.
Survey reveals that SMEs have been utilising digital technology across different business functions, with 60 percent of enterprises using digital tools for human resources, 51 percent for sales and marketing, and 48 percent for finance. The accounting software (such as Tally/ Vyapar/ Busy, etc.) and business applications like ERP and CRM were reported to be the most used digital tools by SMEs. What is noteworthy is that about 37 percent of enterprises surveyed were also using cloud-based business applications such as IaaS, PaaS, SaaS, etc.
Most of the firms have experienced improvements in productivity and reductions in operational costs as a result of incorporating digital technology into their business functions. Approximately 35 percent of respondents reported a reduction in their annual operational costs by 11-20 percent as a result of digitalisation. Another 30 percent of respondents indicated that their annual operational costs had decreased by more than 20 percent.
SMEs have also been leveraging e-commerce platforms and online marketplaces to reach a larger customer base and expand their market presence. These platforms provide opportunities for SMEs to showcase and sell their products nationally and globally. In terms of online markets and sales platforms, a significant 71 percent of participating enterprises had their own online channels or sales platforms (such as a website to display or sell products).
Amongst the enterprises that reported selling through online channel(s), 24 percent reported that more than half (50 to 75 percent) of their overall sales came through online platforms like e-commerce platforms or own website. Another 39 percent respondents reported that one fourth to half of their sales were through such online platforms.
Sustainability practices by SMEs in India
In recent years, there has been a growing emphasis on adoption of sustainable practices by Small and Medium Enterprises (SMEs) in India. By adopting sustainable practices, SMEs can mitigate their ecological footprint, optimize resource utilization, and minimize waste generation.
FICCI study shows an overwhelming 72 percent of respondents were generally aware of sustainability and ESG practices. The importance of buyer support in implementing sustainability and ESG practices was instrumental as 64 percent of enterprises received guidance and support from their buyers.
Over the past two years, a significant number of surveyed enterprises have taken steps to adopt sustainable practices. The highest proportion of enterprises (41 percent) implemented measures to eliminate paper usage, demonstrating a growing awareness of the need to reduce waste and conserve resources, conserve water (41 percent), invest in green projects (39 percent), etc. The respondents also highlighted their priority for implementing sustainable practices over the next two years, which included the usage of renewable energy (36 percent), and investment in green projects (35 percent).
The respondents also highlighted the key impediments faced by SMEs in adopting sustainable practices. Majority respondents (42 percent) have indicated that time constraint is a key challenge in adopting sustainability practices, followed by limited funding (41 percent) and lack of incentives for implementation (41 percent).
www.ficci.in
