Ease of Doing Business for MSMEs: Weeks soon after the Union Cabinet permitted one hundred per cent foreign direct investment (FDI) in the telecom sector below the automatic route, the Department for Promotion of Industry and Internal Trade (DPIIT) on Wednesday notified the government’s move – portion of the relief package announced for the sector. The reforms are intended to address the liquidity desires of telcos along with far better competitors, employment, and general development. Major telecom operators in the nation currently have micro, compact and medium enterprises as one of their crucial focus places when seeking at channels of development ahead.
For instance, Airtel had tied up with the government’s MSME promotion body National Small Industries Corporation (NSIC) “to make it easier for millions of small and medium businesses get access to Airtel’s Connectivity, Conferencing, Cloud, Security, and Go-to-Market solutions,” according to a firm statement. Likewise, a number of initiatives have been taken by the firm to digitise MSMEs. Reliance also had announced plans for SMEs in 2019 to present cloud connectivity and a suite of enterprise applications at one-tenth of normal rates, in partnership with Microsoft. Vodafone Idea also has a suite of options for compact firms across connectivity, safety, the web of items, and more.
So, would one hundred per cent FDI in telecom advantage MSMEs provided the market place for digitisation of such enterprises in jaw-dropping? According to a Cisco and IDC survey titled 2020 Asia Pacific SMB Digital Maturity Study, Indian SMEs are probably to add $158 billion to $216 billion to the country’s gross domestic solution (GDP) in 4 years on the back digitalization of their firms. Lack of enabling technologies was amongst 3 crucial digital challenges for Indian SMEs apart from the shortage of digital abilities and talent and lack of commitment or price range from management.
Also study: Bullish on procurement from MSMEs: Out of more than 50 ministries, departments, these 5 exceeded targets
“If there is more investment, the debt-ridden telcos will be less stressed and will be able to invest more in building and improving infrastructure that can power MSMEs. There might be some new greenfield operators who would be more aggressive like Rakuten in Japan and bring 5G network for instance for SMEs. It will spark a different conversation altogether. On the other hand, there are many software companies building digital solutions like Saankhya Labs making chipsets. Such businesses and others offering cloud solutions might get more investment that will lead to better offerings for SMEs,” Neil Shah, Vice President – Research, Counterpoint Research told TheSpuzz Online.
Importantly, in order to boost domestic manufacturing, investments and export in the telecom and networking gear, the Department of Telecommunications (DoT) in February this year had notified Rs 12,195-crore Production Linked Incentive (PLI) Scheme for 5 years though operational recommendations had been issued in June this year. For the MSME category, the monetary allocation was Rs 1,000 crores. The scheme stipulated a minimum investment limit of Rs 10 crores for MSMEs and Rs one hundred crores for non-MSME applicants.
“In short to medium term I don’t see it (100 per cent FDI) making much difference though it is a good move and we need more investments. There are two big practical challenges – mobile network coverage and bandwidth or speed. India’s digital story has unfortunately become synonymous with mobiles and dongles at best. For MSMEs, if digital is synonymous with mobile, it can work for them but it has to address the challenge of coverage. None of the networks is nationwide even though they claim. Right now, coverage is bare minimum in India with around 400,000 towers while China is into millions while we have a comparable population. So, you need that kind of blanket coverage before you talk about helping MSMEs,” Shiv Putcha, Founder and Principal Analyst, Mandala Insights told TheSpuzz Online.
Subscribe to TheSpuzz SME newsletter now: Your weekly dose of news, views, and updates from the world of micro, compact, and medium enterprises
India’s August 2021 mobile download speed stood at 17.96 Mbps with 42 ms latency and was ranked 126th globally. In terms of fixed broadband speed, the rank was 68 with a download speed of 62.45 Mbps and 16 ms latency, according to the web speed testing tool Speedtest by Ookla.
“Once you put up towers, you need to make sure there is enough speed. Watching videos online is one thing but to do business, you need reliable and stable speed. Sending and receiving payments without much signals won’t help MSMEs. Often it is not easy to get signals in the city. MSMEs are happy to go digital but there is a huge constraint on them being able to complete transactions at the last mile. So digital story needs to be end-to-end and that currently doesn’t exist in India,” added Putcha.