Digital Transformation of MSMEs in India: Factors, Problems and Prospects

Abstract

Internet is inhabiting an essential space in today’s modern life. It has influenced our day-to-day activities by providing essential information, connectivity through online platforms and filled the gap between institution and individuals. Use of new technologies are paving our ways to enter into new era of supply chains where products and services are available to the customers on fingertips. In today’s digital era, where consumers have numerous choices, the producers are required to take more informed decision about their businesses and needed to act according to the demand and preferences of the individuals. Which requires enterprises to be fully equipped with these digital technologies and essential education and training to handle the new ways effectively and efficiently. While the COVID-19 pandemic severely impacted the MSMEs sector, adoption of digital platforms emerged as a life saver for many of the start-up and small businesses. Enterprises adopted the online ways for sale and purchase of goods, using digital payments through BHIM, Google pay, Phonepe and others. Which reflects that adoption of digitalization of small enterprises is the need of the hour. However, due to many physical and economic constraints, Indian MSMEs are lagging behind in adoption of digital technologies and still depending on traditional ways of marketing and managing the enterprise. In this background, this descriptive paper aims to identify major factors which are helping enterprises to adopt digital technologies and to analyze the major socio-economic constraints before the enterprises in adoption of digital technologies. The paper is theoretical in nature and will use secondary data sources to provide the current state of digital transformation of Indian MSMEs.