MSMEs' business spending has the potential to reach $15 trillion by 2030

The Micro, Small, and Medium Enterprises (MSMEs) sector has seen a digital acceleration in the past few years like never before. However, the pace at which MSMEs should accelerate is slower than that of corporates, given the amount of digital innovation happening in the country today, a report by global management consulting firm Kearney, in partnership with fintech start-up, EnKash, has stated. 
 
The report added that business spends, which currently stands at $6-$7 trillion, have the potential to reach $15 trillion by 2030. 
 
The report pointed out that demonetisation and the pandemic have played a key role in digitising SMBs or small and medium businesses. However, adopting and upscaling the digital payments ecosystem within the B2B segment, specifically, can pave the way for digital-first thinking within this sector.
 
According to the report, the rate of digitisation is pretty dismal. Of the 64 million businesses in India, only about 3-4 million businesses have shown rapid progress in digitising. 
 
What stops them?
 
There are various reasons. To begin with, the low adoption of commercial cards among micro-enterprises is because of a lack of awareness. The same is the case with other enterprises as well. Only large businesses are acing the adoption of commercial cards in the current scenario. Micro enterprises, which form the largest pool of businesses as compared to small and medium businesses, have seen medium adoption of NEFTs. However, the problem in taking this number further up is due to a lack of scale. 
 
Incidentally, NEFTs are witnessing a high adoption among small and medium enterprises owing to integrated ERP solutions. 
 
The way to drive digital payments within this sector, the report suggests, hinges on four aspects- technological adoption, standardisation, regulatory policy-making, and relying on solutions from the fintech start-up ecosystem.
 
India houses the third-largest start-up ecosystem in the world after the US and China. From syncing payroll expenses to cross-border accounting, invoice financing, auto reconciliation, and integration with CRM sales software, the fintech-enabled solutions are increasingly being leveraged and adopted by countries across the globe driving efficiency, the report read. 
 
Finally, government initiatives such as the Open Credit Enablement Network, India Stack, and Aadhar have also propelled the sector further by automating processes. 

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