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  • Writer's pictureDr. Rajesh Mohan Rai

Battered by COVID-19, MSMEs need to overcome these challenges to survive and thrive

MSMEs, the backbone of India's economy, have been struggling amid the onslaught of COVID-19. Taking these challenges head-on can help them survive and thrive amidst the uncertain climate.

The Indian MSME sector has been battered by the COVID-19 pandemic, with millions of businesses across different sectors seeing extensive economic devastation. The sector was under stress even before the pandemic, with challenges such as delayed payments, over-dependence on few customers, and lack of a skilled workforce.

The pandemic has broken MSMEs’ back, and the biggest challenge now is survival. MSMEs are the backbone of the national economy. With around 63.5 million units across India, they contribute around 6.11 percent of the manufacturing GDP, 24.69 percent of the GDP from service activities, and 34 percent of India's manufacturing output. They provide employment to around 120 million people and contribute around 45 percent of the overall exports from India.

The sector has consistently maintained a growth rate of over 10 percent. One-fifth of these MSMEs are based out of rural areas. This also indicates the role they play in promoting sustainable and inclusive development, and generating large-scale employment in rural areas.

However, they face multiple challenges. Addressing a few of these challenges will ensure that these businesses remain competitive, relevant, and grow.


The most critical challenge for MSMEs is attracting, retaining, and developing talent. For the importance of the right talent can’t be undermined. Most MSME owners agree that for business to be consistently successful and grow, the ability to attract high performing talent is vital.

The reasons for not being able to attract good talent are lack of opportunities for career progression, and lack of empowerment, micro management, and freedom by the owner. MSME business owners must attract the right people at the right time and put in place structured processes to manage them.




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