Mobilizing Indian SMEs ready for Industry 4.0

The Small and Medium scale enterprises (SMEs) play a crucial role in the socio-economic growth story of India accounting for more than 45% of the manufacturing output and around 40% of the total export of India , as per annual report of Ministry of MSME. This sector is also the leading provider for employment and business avenues in rural and urban India, thereby spurting equitable and inclusive growth across local economies. Yet, the potential of the Indian SMEs in creating jobs and livelihood generation opportunities remains untapped. Inadequate access to technology, technical and business skills and finance have been highlighted as some of the key constraints for the MSMEs in the manufacturing sector (Source : ASSOCHAM)

Importance of SMEs for India

1. Creates large scale employment — India produces about 1.2 million graduates per year, of the total number about 0.8 million are engineers. SMEs will be boon for any job seeking graduate.
2. Economic stability in terms of Growth and leverage Exports — MSME is a significant growth driver in India, with it contributing to the tune of 8% to GDP
3. Encourages Inclusive Growth
4. Important role in making “Make in India” — Post the inception of ‘Make in India’, a signature initiative by the prime minister of India, the process of incorporating a new business has been made easy. MSME is the backbone in making this dream a possibility, the government should direct the financial institution to lend more credit to enterprises in MSME sector.

Sector focus

India is one of the world’s fastest-growing economies housing 40 million small and medium enterprises (SMEs). Growth of the new wave SMEs led by entrepreneurship focused on innovation and technologies, creating opportunities for women entrepreneurs and developing skilled resources across the following opportunity areas.

Source: (KPMG)

From the Government perceptive the short term focus should be to increase GDP contribution from 8 % to 20 % by 2020. Following is the sector wise contribution towards export from SMEs

Source (KPMG)

India can seize the opportunities provided by the dynamics of globalization which has resulted in a dramatic shift of manufacturing to developing countries over the last decade. India can significantly diversify its export portfolio, both in terms of products and goods exported as well as regional coverage.

An opportunity to be seized

Some of the key national imperatives to propel India into the next wave of growth include:

Source (Indusnet)

1. Promoting a culture of innovation and entrepreneurship
2. Skills development
3. Business environment to support and nurture startups
4. Global competitiveness and access to technology
5. Women entrepreneurship

How the SMEs Sector Can Benefit from the IOT Revolution

Smaller businesses can benefit from IoT in a number of ways which we will discuss later on. The IoT is expected to help you in your product design and marketing strategies, based on consumer behavior. Whether you have a small or a complex product, maintenance of the same should become really easy, and with this, your reputation will build.

1. Internet of things can help you go green and meet regulation requirements
2. Customer satisfaction
3. Increase your financial success
4. Compliance with regulations and standards
5. Enhance your operational efficiency
6. Improved analytics and business intelligence

Draft Policy on Internet of Things : From Department of Electronics & Information Technology

The Indian Government’s plan of developing 100 smart cities in the country, for which Rs. 7,060 crores has been allocated in the current budget could lead to a massive and quick expansion of IoT in the country.

The Centre of Excellence (CoE) for Internet of Things (CoE-IoT) will host IoT incubation infrastructure to support start-ups, SMEs, students and other innovators based on membership and support from design to prototype in production their ideas. The CoE-IoT will be set up in major cities for Internet of Things innovation housing hardware design tools including 3D manufacturing facilities, PCB manufacturing and PCB assembly, rapid prototyping, wireless development kits, application sensors, software tools, training on specific technologies, industry interface etc. that otherwise would be difficult to afford for the start-ups, democratizing the innovation process.

To support participation in leading international global trade fairs to show case Indian industries’ capabilities in IoT:

1. Government will fund exhibition space cost (up-to 80% funding) to 1000 Indian SMEs (Small and Micro Enterprises) who are well credit rated by National Small Industries Corporation/ MSME and, are contributing to IoT industry and need international exposure to promote their products at international exhibitions and for study tours.
2. Government will also fund (up-to 100%) IoT specific study tours by Industry Associations and supporting government organizations.
3. To promote Venture Funds specifically directed to support companies in IoT related domains like Memory, Processor, Sensors, Low power devices and solar electronics. This will be in the form of low/ Zero cost funding of eligible projects, giving priorities to start-ups.
4. In order to stimulate private sector’s investment in IoT related R&D and to undertake IoT related R&D projects with international partners, an innovative project named “International IoT Research Collaboration scheme (IIRC)” to be initiated by DeitY

Mobilizing Human Resource for Industry 4.0 Jobs

To create an IoT Education and Awareness program in the country for developing skill sets for IoT at all levels. Objectives of this program would be : 1. Introduction of IoT Curriculum at M.Tech & B.Tech level and Research Activity/PhD

2. Certificate Course in IoT, 6-weeks/ 2-weeks training program. To setup norms for accreditation of all such courses relating to IoT

A new horizon for SMEs

Enabling the five pillars can empower the SMEs for more contribution towards GDP and growth of economy as a whole.

Source (KPMG)

Infrastructure : (a) Allocate 25 per cent of the land available at all Industrial corridors for MSMEs at different rate slabs and for acquiring models. This will help MSMEs to start their business ventures at affordable rates in key industrial parks and clusters. (b) Incubation cells and hubs within clusters can be developed in collaboration with academia / regional institutions to provide MSMEs with mentoring and technology support, and shared R&D facilities

Regulatory : (a) Single comprehensive MSME Law for India, applicable in all states and territories and applicable to all MSMEs. (b) Effective policy to deal with delayed payments to MSME by large companies on a timely basis (c) Exit policy for MSME sector which can help MSMEs exit the business without any personal financial loss, and a second chance for entrepreneurs.

Funding : (a) Open environment and incentives for investments by HNWI and funds into MSME business as well incentivise debt funding in MSME segment by reduction in direct tax rates on income / profits generated by funding MSME segment (b) Incentivise the bank by making lending to MSME more manageable and profitable for banks

Performance incentives : (a) Create business facilitation centers with linkage of all stakeholders i.e. Industry Associations, equity funds, banks and financial institutions, MSME, etc at regional and district level to facilitate access to finance for MSMEs (b) Direct Tax exemption on export income and income generated directly or indirectly

Skill India : (a) Employee skilling through approved courses at approved training centers to receive direct incentives and grants (b) Support and Incentives for upgradation of skill development Institutions.

Looking forward

Certainly, the Internet of Things is likely to revolutionize the Internet and also the way we look at our lives. Objects and things will all soon be connected to the Internet, all interacting with both the users, the Internet and with the manufacturers, sharing important information, providing analytics and also engaging in their own processes. All these will have widespread ramifications in the business world.

While larger companies are already making use of the IoT, SMEs can also reap the benefits of the Internet of Things. This will help them to create better products that are more intelligent, green and profitable. All of these are very important for a company to have a competitive edge.