DIGITAL TRANSFORMATION OF MSMES: STRATEGY AND CHALLENGES

Abstract

Micro, Small and Medium Enterprise (MSME) sector is a very prominent sector of the Indian economy, contributing significantly, to Gross Domestic Product (GDP), merchandise exports and inclusive growth of the country. It is second largest source of providing employment after agriculture. It is also a major socio-economic contributor of our country. However, this sector has faced few challenges over the past few years like lack of technological knowhow, insufficient supply chain, capital crunch that have worsen the condition. It is considered that technology is playing wider role in economic growth. Digital technology has brought a drastic change in way of doing business, it automates the process and product, so it improves the production and quality of product. Throughout the period, the government also has undertaken several policy measures related to finance, infrastructure, risk mitigation etc. to trigger growth of MSMEs. With the government initiatives, such as, digital India that led the boom in digital payment and the overall technological adoption, in doing business, has improved in the country. This paper outlines the potential of digital transformation which could manacle its growth prospects and the possible challenges to transform the MSME. This paper provides a comprehensive view of the factors affecting digital transformation process.