MSMES BECOME MORE COMPETITIVE WITH CII'S NEW TECHNOLOGY

Ravi Teja Sharma, Mumbai, July 28, 2008
The Economic Times

There is a need for the MSME segment in India to improve efficiency in order to be more competitive in the international and domestic markets. The way forward, says the Confederation of Indian Industry (CII), is the implementation of Information and Communication Technologies (ICT) at the MSME level. At the moment, the penetration of ICT is between 17-20% in the MSME segment, the total size of which is estimated to be 35 million units spread across the country.

To help MSMEs enhance their competitiveness using IT in an environment where they are being attacked by imports, CII’s national committee on IT, ITES and e-commerce plans to start a programme to improve ICT penetration in the MSME segment.

The committee has prepared a report on the proposal, which was given to Dinesh Rai, secretary, ministry of MSME, who was present at the committee meeting. The timing of CII’s report seems to be apt. The secretary informed that his ministry is finalising a budget of Rs 200 crore for launching a scheme on ICT improvement in MSMEs in the next month or so.

The CII, at present, is working with around 300 MSME clusters across India on various issues. The plan is to select 10 clusters from among these (each with 10-12 companies) and run a pilot with them on showcase ICT intervention and its impacts on these companies.

“We will start by defining their needs and then implementing ICT in their setups,” says Ajai Chowdhry, chairman, CII National Committee for IT. Over the years, larger companies in India in all sectors have effectively used information technology to enhance their productivity and competitiveness. “Why can’t our MSMEs replicate this feat? We can help them cut costs using ICT,” says Chowdhry.

But there are issues, which have to be addressed if ICT penetration is to improve. Praveen Toshniwal, chairman of Nivo Controls and also a member of the committee, says low awareness is the biggest concern. Also these firms then have to be given proper IT support and they need to understand how to utilise it best. The training programme with the 10 initial clusters hopes to do just that.

The biggest hurdle, feels Sarita Nagpal, deputy director general, CII, is that of cost. For a small firm, spending Rs 2 lakh on buying IT equipment is a big deal. “They ask us what is the RoI on this investment. These are the answers that we need to give. Automating processes will help improve their efficiency,” she says.

In a cluster there are many systems that MSMEs can share, for example, HR and accounting systems. “We will look at providing such systems as well as localising others to guide them on IT solutions as well as the right equipment to buy,” explains Chowdhry.